What changed in Bridgeline Digital, Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, Bridgeline Digital, Inc. (BLIN) added 126 paragraphs, removed 168, and edited 113 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+63/−78), Item 1. Business (+36/−47), Item 1A. Risk Factors (+24/−40).

Did Bridgeline Digital, Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 24 new/edited paragraphs and 40 removed paragraphs versus the 2022 10-K.

What changed in Bridgeline Digital, Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 63 new/edited paragraphs and 78 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this BLIN 10-K diff come from?

The source filings are Bridgeline Digital, Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Bridgeline Digital, Inc.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of Bridgeline Digital, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+126 added−168 removedSource: 10-K (2023-12-27) vs 10-K (2022-12-21)

Top changes in Bridgeline Digital, Inc.'s 2023 10-K

126 paragraphs added · 168 removed · 113 edited across 4 sections

Item 7. Management's Discussion & Analysis+63 / −78 · 58 edited
Item 1. Business+36 / −47 · 31 edited
Item 1A. Risk Factors+24 / −40 · 21 edited
Item 5. Market for Registrant's Common Equity+3 / −3 · 3 edited

Item 1. Business

Business — how the company describes what it does

31 edited+5 added−16 removed11 unchanged

2022 filing

2023 filing

Biggest changeCustomers We primarily serve the following vertical markets that we believe have a history of investing in information technology enhancements and initiatives: ● Distributors and Wholesalers ● Multi-Unit Franchises & Enterprises ● Manufacturers ● eCommerce Retailers ● Industrial Distribution (Electrical, Plumbing, Building, Cleaning, Restaurant, Furniture Suppliers) ● Health Services and Life Sciences ● High Technology (software and hardware) ● Credit Unions and Regional Banks ● Associations and Foundations For the years ended September 30, 2022 and 2021, no customer exceeded 10% of the Company’s total revenues.

Biggest changeCustomers We primarily serve the following vertical markets that we believe have a history of investing in information technology enhancements and initiatives: ● Associations and Foundations ● Banks and Credit Unions ● eCommerce Retailers ● Franchises & Enterprises ● Health Services and Life Sciences ● Industrial Distribution and Wholesale ● Manufacturers ● Technology For the years ended September 30, 2023 and 2022, no customer exceeded 10% of the Company’s total revenues. 6 Competition The markets for our products and services, including eCommerce platform software, eMarketing software, software for web content management, web analytics software and digital engagement services are highly competitive, fragmented, and rapidly changing.

Our ability to develop mission critical websites and online stores on our own deeply integrated platforms provides a quality end-to-end solution. ● We believe the interface of the Bridgeline platforms have been designed for ease of use without requiring substantial technical skills from our customers. ● Finally, we believe the Bridgeline platforms offer a competitive price-to-functionality ratio when compared to our competitors.

Our ability to develop mission critical websites and online stores on our own deeply integrated platforms provides a quality end-to-end solution. ● The interface of the Bridgeline platforms have been designed for ease of use without requiring substantial technical skills from our customers. ● Finally, we believe the Bridgeline platforms offer a competitive price-to-functionality ratio when compared to our competitors.

We currently have partner relationships with platforms such as Optimizely, BigCommerce, Adobe, Sitefinity, Shopify, and others. 5 Organic Growth from Existing Customer Base Our business development professionals seek ongoing business opportunities within our existing customer base and within other operating divisions or subsidiaries of our existing customer base. New Customer Acquisition We identify customers within our vertical expertise.

We currently have partner relationships with platforms such as Adobe, BigCommerce, Optimizely, Sitefinity, Shopify, and others. Organic Growth from Existing Customer Base Our business development professionals seek ongoing business opportunities within our existing customer base and within other operating divisions or subsidiaries of our existing customer base. New Customer Acquisition We identify customers within our vertical expertise.

We believe that a compensation program with both short-term and long-term awards provides fair and competitive compensation and aligns employee and stockholder interests, including by incentivizing business and individual performance (pay for performance), motivating based on long-term company performance and integrating compensation with our business plans.

We believe that a compensation program with both short-term and long-term awards provides fair and competitive compensation and aligns employee and stockholder interests, including by incentivizing business and individual performance (pay for performance), motivating individuals based on long-term company performance and integrating compensation with our business plans.

Copies of the following are also available through our website on the “About – Investor Relations” page and are available in print to any shareholder who requests it: ● Code of Business Ethics ● Committee Charters for the following Board Committees: - Nominating and Corporate Governance Committee - Audit Committee - Compensation Committee The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.

Copies of the following are also available through our website on the “About – Investor Relations” page and are available in print to any stockholder who requests it: ● Code of Business Ethics ● Committee Charters for the following Board Committees: - Nominating and Corporate Governance Committee - Audit Committee - Compensation Committee The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.

Information regarding the SEC’s Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information and can be found at http://www.sec.gov. 8

We use surveying techniques to gauge and monitor customer sentiment as well as digital marketing capabilities to inform our customer base of the latest feature releases and product innovations. We make product releases available via email campaigns as well as publish on our website.

In addition to cash and equity compensation, we also offer employees benefits such as life and health (medical, dental & vision) insurance, paid time off, paid parental leave, and a 401(k) plan.

In addition to cash and equity compensation, we also offer employees benefits such as life and health (medical, dental & vision) insurance, paid time off, and a 401(k) plan.

All of Bridgeline’s software is available through a cloud-based Software as a Service (“ SaaS ”) model, whose flexible architecture provides customers hosting and support.

All of Bridgeline’s software is available through a cloud-based Software as a Service (“SaaS”) model, whose flexible architecture provides customers hosting and support.

As of September 30, 2022, we had approximately 60 full-time employees. Of our full-time employees, approximately 50 were in the United States and the remaining were based in our various international locations. None of our employees are represented by a labor union or covered by a collective bargaining agreement.

As of September 30, 2023, we had approximately 55 full-time employees. Of our full-time employees, approximately 40 were in the United States and the remaining were based in our various international locations. None of our employees are represented by a labor union or covered by a collective bargaining agreement.

Research and development expenses were approximately $3.2 million or 19% of revenues and $2.4 million or 18% of revenues during fiscal 2022 and 2021, respectively. 6 Employees Human Capital Bridgeline is dedicated to creating the best digital presence for our customers, and our employees are critical to achieving this mission.

Research and development expenses were approximately $3.7 million or 23% of revenues and $3.2 million or 19% of revenues during fiscal 2023 and 2022, respectively. Employees Human Capital Bridgeline is dedicated to creating the best digital presence for our customers, and our employees are critical to achieving this mission.

We receive leads by maximizing the SEO capabilities of our own websites. Through our websites, we provide various educational whitepapers and promote upcoming on-line seminars. In addition, we utilize banner advertisements on various independent newsletters and paid search advertisements that are linked to our website. We also participate and exhibit at targeted online and in-person events and conferences.

Through our websites, we provide various educational whitepapers and promote upcoming online seminars. In addition, we utilize banner advertisements on various independent newsletters and paid search advertisements that are linked to our website. We also participate and exhibit at targeted online and in-person events and conferences.

OrchestraCMS is the only content and digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees. The software uniquely combines content with business data, processes and applications across any channel or device, including Salesforce Communities, social media, portals, intranets, websites, applications and services.

Bridgeline also offers OrchestraCMS as a Digital Experience Platform. ● OrchestraCMS is a digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees. The software combines content with business data, processes and applications, including Salesforce Communities, social media, portals, intranets, websites, applications and services.

These companies are generally categorized in the following vertical markets: ● Distributors and Wholesalers ● Multi-Unit Franchises & Enterprises ● Manufacturers ● eCommerce Retailers ● Industrial Distribution (Electrical, Plumbing, Building, Cleaning, Restaurant, Furniture Suppliers) ● Health Services and Life Sciences ● High Technology (software and hardware) ● Credit Unions and Regional Banks ● Associations and Foundations We also pursue strategic alliances and partnerships to enhance the sales and distribution opportunities of Bridgeline intellectual property.

These companies are generally categorized in the following vertical markets: ● Associations and Foundations ● Banks and Credit Unions ● eCommerce Retailers ● Franchises & Enterprises ● Health Services and Life Sciences ● Industrial Distribution and Wholesale ● Manufacturers ● Technology We also pursue strategic alliances and partnerships to enhance the sales and distribution opportunities of Bridgeline intellectual property.

OrchestraCMS also has a rich set of APIs to enable development of custom solutions, third-party integrations and delivery of digital transformation initiatives on the Salesforce platform, helping customers drive deeper engagement and collaboration, increase efficiency and minimize risk. 4 Services Revenue from Digital Engagement Services Revenue from all digital engagement services is reported as “ Digital engagement services ” in the accompanying consolidated financial statements.

We believe we compete adequately with others and we distinguish ourselves from our competitors in a number of ways, including: ● We believe our competitors generally offer their web application software with an emphasis on a singular focus/function (such as content management only, or commerce only) as compared to the deeply integrated and multi-faceted approach provided by Bridgeline’s platforms. ● We believe our competitors can generally only deploy their solutions in either a Cloud/SaaS environment or in a dedicated server environment.

We believe we compete adequately with others and we distinguish ourselves from our competitors in a number of ways, including: ● Our competitors generally offer their web application software with an emphasis on a singular focus/function (such as content management only, or commerce only) as compared to the deeply integrated and multi-faceted approach provided by Bridgeline’s platforms. ● The architecture comprising Bridgeline’s platforms are flexible and some are capable of being deployed in either a SaaS or dedicated server environment. ● The majority of our competitors do not provide interactive technology development services that complement their software products.

Services Revenue from Digital Engagement Services Revenue from all digital engagement services is reported as ‘ Digital engagement services ’ in the accompanying consolidated financial statements. Digital engagement services address specific customer needs such as digital strategy, web design and web development, usability engineering, information architecture, and SEO for their mission critical website, intranet or online store.

Digital engagement services address specific customer needs such as digital strategy, web design and web development, usability engineering, information architecture, and SEO for their mission critical website, intranet or online store.

Our business development professionals create an annual territory plan identifying various strategies to prospect and engage our target verticals. Customer Retention Programs We have a dedicated Customer Success team that engages with customers regularly to conduct strategic business reviews and audits to ensure they are getting the most value out of the Bridgeline product offerings.

Customer Retention Programs We have a dedicated Customer Success team that engages with customers regularly to conduct strategic business reviews and audits to ensure they are getting the most value out of the Bridgeline product offerings.

Social Media Programs We market Bridgeline’s upcoming events, white papers, blogs, case studies, digital product tutorials, announcements, and related articles frequently on leading social media platforms such as Twitter, LinkedIn, YouTube and Facebook. 5 Research and Development We have research and development activities focusing on creating new products and innovations, product enhancements, and funding future market opportunities.

Bridgeline also provides educational white papers and featured case studies, to inform customers of best practices and enhancements. We also host educational on-line webinars for customers as well as face-to-face customer focus groups and training sessions. New Lead Generation Programs We generate targeted leads and new business opportunities by leveraging on-line marketing strategies.

Bridgeline also provides educational white papers and featured case studies, to inform customers of best practices and enhancements. We also host educational online webinars for customers as well as face-to-face customer focus groups and training sessions.

Bridgeline Digital was incorporated under the laws of the State of Delaware on August 28, 2000. Locations The Company’s corporate office is located in Woburn, Massachusetts. The Company maintains regional field offices serving the following geographical locations: Woodbury, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium. The Company has four wholly-owned subsidiaries: Bridgeline Digital Pvt.

The Company maintains regional field offices serving the following geographical locations: Woodbury, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium. The Company has four wholly-owned subsidiaries: Bridgeline Digital Pvt.

The Unbound platform, combined with its professional services, assists customers in powering engaging digital experiences that drive lead generation, increase revenue, improve customer service and loyalty, enhance employee knowledge, and reduce operational costs. 3 The TruPresence product empowers large franchises, brand networks, and other multi-unit organizations to manage a large hierarchy of digital properties at scale.

Each Unbound implementation incorporates a set of flexible templates and modules to accelerate implementation speed and reduce costs. The Unbound platform, combined with its professional services, assists customers in powering engaging digital experiences that drive lead generation, increase revenue, improve customer service and loyalty, enhance employee knowledge, and reduce operational costs.

With the introduction of new technologies and market entrants, we expect competition to persist and intensify in the future.

Barriers to entry in such markets remain relatively low. The markets are significantly affected by new product introductions and other market activities of industry participants. With the introduction of new technologies and market entrants, we expect competition to persist and intensify in the future.

This software is available as a SaaS license and is reported as Subscription and perpetual licenses in the accompanying consolidated financial statements. ● Celebros Search by Bridgeline is a commerce-oriented, site search product that provides for Natural Language Processing and incorporates artificial intelligence to present relevant search results based on long-tail keyword searches.

HawkSearch has integrations and partner relationships with platforms such as Adobe, BigCommerce, Optimizely, Sitefinity, Shopify and others. ● Celebros Search is a commerce-oriented, site search product that provides for Natural Language Processing and incorporates artificial intelligence to present relevant search results based on long-tail keyword searches.

Woorank’s clear, actionable insights help companies increase their search engine ranking, while boosting website traffic, audience engagement, conversion, and customer retention rates. Bridgeline offers franchise marketing software with its TruPresence platform.

Bridgeline offers Search Engine Optimization auditing through its WooRank by Bridgeline software. ● Woorank is a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO. Woorank’s clear, actionable insights help companies increase their search engine ranking, while boosting website traffic, audience engagement, conversion, and customer retention rates.

HawkSearch is a site search, recommendation, and personalization application, built for marketers, merchandisers, and developers to enhance, normalize, and enrich an online customer's content search and product discovery experience. HawkSearch leverages advanced artificial intelligence, machine learning and industry-leading merchandising features to deliver accurate and highly relevant results and recommendations derived from multiple data sources.

HawkSearch leverages artificial intelligence, machine learning and industry-leading merchandising features to deliver accurate, relevant and personalized results and recommendations derived from multiple data sources.

Celebros Search has plug-ins into the Bridgeline Unbound Commerce offering in addition to many other third-party Commerce platforms such as Magento, Shopify, Hybris, and more. ● HawkSearch by Bridgeline is a site search, recommendation, and personalization application built for marketers, merchandisers, and developers to enhance, normalize, and enrich an online customer's content search and product discovery experience.

Celebros Search is a semantic search and conversion technology that is available in seven languages. Celebros Search has plug-ins into the Bridgeline Unbound Commerce offering in addition to many other third-party Commerce platforms such as Adobe, Hybris and Shopify.

Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium. Products and Services Products Subscription and Perpetual Licenses Bridgeline offers enterprise site search solutions with its Celebros Search and HawkSearch products.

Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium. 3 Products and Services Products Subscription and Perpetual Licenses All of Bridgeline’s software is available through a cloud-based Software as a Service (“SaaS”) model, whose flexible architecture provides customers hosting and support.

Celebros Search is a commerce-oriented site search product that provides Natural Language Processing with artificial intelligence to present relevant search results based on long-tail keyword searches with support for multiple languages. Woorank is a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO.

Bridgeline's product offerings include: HawkSearch: a site search, recommendation, and personalization software application, built for marketers, merchandisers, and developers to enhance, normalize, and enrich an online customer's content search and product discovery experience. Celebros Search: a commerce-oriented site search product that provides Natural Language Processing with artificial intelligence to present relevant search results based on long-tail keyword searches.

This software is available as a SaaS license and is reported as Subscription and perpetual licenses in the accompanying consolidated financial statements. ● Woorank by Bridgeline is a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO.

Woorank: a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO. Unbound: a Digital Experience Platform that includes Web Content Management, eCommerce, Digital Marketing, and Web Analytics. TruPresence: a web content management and eCommerce platform that supports the needs of multi-unit organizations and franchises.

Woorank’s clear, actionable insights help companies increase their search engine ranking, while boosting website traffic, audience engagement, conversion, and customer retention rates. Our Unbound platform is a Digital Experience Platform that includes Web Content Management, eCommerce, Digital Marketing, and Web Analytics.

Bridgeline offers Bridgeline Unbound as a Digital Experience Platform. ● Unbound is a Digital Experience Platform that includes Web Content Management, eCommerce, Digital Marketing, and Web Analytics. Unbound Content, Unbound Marketing, Unbound Commerce, and Unbound Insights empower marketers to easily manage their digital experiences and create personalized customer journeys.

Removed

Celebros Search is a semantic search and conversion technology that is available in seven languages.

Added

OrchestraCMS: the only content and digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees. Bridgeline Digital was incorporated under the laws of the State of Delaware on August 28, 2000. Locations The Company’s corporate headquarters is located in Woburn, Massachusetts.

Removed

HawkSearch leverages advanced artificial intelligence, machine learning and industry-leading merchandising features to deliver accurate and highly relevant results and recommendations derived from multiple data sources. HawkSearch has integrations and partner relationships with platforms such as Optimizely, BigCommerce, Magento, Sitefinity and others. Bridgeline offers Search Engine Optimization auditing through its WooRank by Bridgeline software.

Added

Additionally, HawkSearch and Unbound have the option to be available via a traditional perpetual licensing business model, in which the software can reside on a dedicated infrastructure either on premise at the customer’s facility, or manage-hosted by Bridgeline via a cloud-based, dedicated hosted services model. This software is reported as Subscription and Perpetual Licenses in the accompanying consolidated financial statements.

Removed

This software is available as a SaaS license and is reported as Subscription and perpetual licenses in the accompanying consolidated financial statements. ● Bridgeline TruPresence is a web content management and eCommerce platform built specifically to support the needs of multi-unit organizations and franchises.

Added

Bridgeline offers enterprise site search solutions with its HawkSearch and Celebros Search products. ● HawkSearch is an AI-powered site search, recommendation, and personalization software application for marketers, merchandisers, and developers to enhance, normalize, and enrich an online customer's product discovery.

Removed

TruPresence provides centralized and distributed management of content and products from parent sites down to multiple child sites for consistency in branding and messaging while also enabling regional / local site owners to manage the local messaging, products and promotions specific to their local market. 4 Bridgeline offers Bridgeline Unbound as either a SaaS or perpetual license and is reported as subscription and perpetual licenses in the accompanying consolidated financial statements. ● Bridgeline Unbound is a technology suite that includes Unbound Content, Unbound Marketing, Unbound Commerce, and Unbound Insights that empower marketers to easily manage their digital experiences and create personalized customer journeys.

Added

Bridgeline offers franchise marketing software with its TruPresence platform. ● TruPresence is a Web Content Management and eCommerce platform that supports the needs of multi-unit organizations and franchises. The TruPresence product empowers large franchises, brand networks, and other multi-unit organizations to manage a large hierarchy of digital properties at scale.

Removed

Each Unbound implementation incorporates a set of flexible templates and modules to accelerate implementation speed and reduce costs. Bridgeline also provides an alternative Digital Experience Platform that is 100% native on Salesforce called OrchestraCMS.

Added

Our business development professionals create an annual territory plan identifying various strategies to prospect and engage our target verticals. New Lead Generation Programs We generate targeted leads and new business opportunities by leveraging online marketing strategies. We receive leads by maximizing the SEO capabilities of our own websites.

Removed

This software is available as a SaaS license and is reported as subscription licenses in the accompanying consolidated financial statements. ● OrchestraCMS by Bridgeline is built 100% native on Salesforce.

Removed

OrchestraCMS helps Salesforce customers create digital experiences for their customers, partners, and employees - combining content with business data, processes and applications across any channel or device, including Salesforce Communities, social media, portals, intranets, websites, applications and services.

Removed

Acquisitions On March 1, 2021, the Company, pursuant to a Share Purchase Agreement (the “WooRank Purchase Agreement”), acquired all of the issued and outstanding shares of WooRank SRL (“WooRank”), an entity located in Belgium.

Removed

The total purchase price of approximately $2.4 million consisted of (1) $285 thousand in cash paid at closing or in close proximity to closing, (2) $376 thousand of deferred cash payable in installments post-closing, (3) a $352 thousand seller note issued to one of the selling shareholders, and (4) amounts payable to one selling shareholder as consideration for assistance with certain matters related to the acquisition for a period of one year from the closing date of the acquisition.

Removed

On the closing date, the Company issued 29,433 shares of its common stock, with an aggregate issuance date fair value of $99 thousand for a portion of the purchase price. The WooRank Purchase Agreement also provides for additional consideration, in the event of the achievement of certain revenue targets and operational goals, to the selling shareholders.

Removed

The fair value of contingent consideration was $1.3 million on the date of the acquisition. On May 28, 2021, the Company, pursuant to a Share Purchase Agreement (the “Hawk Purchase Agreement”), acquired all of the issued and outstanding shares of HawkSearch, Inc., an Illinois corporation (“HawkSearch”).

Removed

The total purchase price of approximately $9.9 million consisted of (1) $4.8 million initial cash payment at closing, (2) an issuance of 1,500 shares of the Company’s newly designated Series D Preferred Stock with an aggregate issuance date fair value of $930 thousand, and (3) $2.0 million deferred cash (payable on or before December 31, 2021).

Removed

The Hawk Purchase Agreement also provides for additional consideration, in the event of achievement of certain revenue targets, to the selling shareholders as an additional earn-out, payable in two installments, as amended and as follows: (i) the aggregate sum of $1,779 thousand, which was paid on July 1, 2022; and (ii) the aggregate sum of $250 thousand, which was paid in October 3, 2022, as included within the Amendment to the Stock Purchase Agreement, dated June 15, 2022.

Removed

The fair value of contingent consideration was $250 thousand on September 30, 2022, all of which was paid in October 2022. Research and Development We have research and development activities focusing on creating new products and innovations, product enhancements, and funding future market opportunities.

Removed

Competition The markets for our products and services, including software for web content management, eCommerce platform software, eMarketing software, web analytics software and digital engagement services are highly competitive, fragmented, and rapidly changing. Barriers to entry in such markets remain relatively low. The markets are significantly affected by new product introductions and other market activities of industry participants.

Removed

The architecture comprising Bridgeline’s platform’s are flexible and some are capable of being deployed in either a Cloud/SaaS or dedicated server environment. 7 ● We believe the majority of our competitors do not provide interactive technology development services that complement their software products.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

21 edited+3 added−19 removed83 unchanged

2022 filing

2023 filing

Biggest changeAs of September 30, 2022, we had an accumulated deficit of approximately $80 million. Our prior losses have had an adverse effect on our stockholders’ equity and working capital. Because of the numerous risks and uncertainties associated with our business, we are unable to predict the extent of any future losses or when we may become profitable.

Biggest changeSince our inception in 2000 and through fiscal 2019, and in fiscal 2021 and fiscal 2023, we have incurred net losses, and may do so again. As of September 30, 2023, we had an accumulated deficit of approximately $90 million. Our prior losses have had an adverse effect on our stockholders’ equity and working capital.

Interference from unauthorized access to or tampering with these systems, including those resulting from cyber-attacks, could result in a variety of consequences, including devaluation of our intellectual property, goodwill, increased expenditures on data security and litigation, and can have a material adverse effect on our business, revenues, reputation, operating results and financial condition. 10 If our security measures or those of our third-party cloud computing platform provider are breached and unauthorized access is obtained to a customer ’ s data, our services may be perceived as not being secure, and we may incur significant legal and financial exposure and liabilities.

Interference from unauthorized access to or tampering with these systems, including those resulting from cyber-attacks, could result in a variety of consequences, including devaluation of our intellectual property, goodwill, increased expenditures on data security and litigation, and can have a material adverse effect on our business, revenues, reputation, operating results and financial condition. 8 If our security measures or those of our third-party cloud computing platform provider are breached and unauthorized access is obtained to a customer ’ s data, our services may be perceived as not being secure, and we may incur significant legal and financial exposure and liabilities.

These factors include, among others: ● changes in demand for our products; ● introduction, enhancement or announcement of products by us or our competitors; ● market acceptance of our new products; ● the growth rates of certain market segments in which we compete; ● size and timing of significant orders; ● budgeting cycles of customers; ● mix of products and services sold; ● changes in the level of operating expenses; ● completion or announcement of acquisitions; and ● general economic conditions in regions in which we conduct business. 13 If we are unable to manage our future growth efficiently, our business, liquidity, revenues and profitability may suffer.

These factors include, among others: ● changes in demand for our products; ● introduction, enhancement or announcement of products by us or our competitors; ● market acceptance of our new products; ● the growth rates of certain market segments in which we compete; ● size and timing of significant orders; ● budgeting cycles of customers; ● mix of products and services sold; ● changes in the level of operating expenses; ● completion or announcement of acquisitions; and ● general economic conditions in regions in which we conduct business. 11 If we are unable to manage our future growth efficiently, our business, liquidity, revenues and profitability may suffer.

Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated with any acquisition or investment activity, may materially reduce our earnings which, in turn, may have a material adverse effect on the price of our common stock. 14 We have issued preferred stock with rights senior to our common stock, and may issue additional preferred stock in the future, in order to consummate a merger or other transaction necessary to continue as a going concern.

Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated with any acquisition or investment activity, may materially reduce our earnings which, in turn, may have a material adverse effect on the price of our common stock. 12 We have issued preferred stock with rights senior to our common stock, and may issue additional preferred stock in the future, in order to consummate a merger or other transaction necessary to continue as a going concern.

Any litigation could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources, and materially harm our business or financial condition. 12 If a third party asserts that we infringe upon its proprietary rights, we could be required to redesign our products, pay significant royalties or enter into license agreements.

Any litigation could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources, and materially harm our business or financial condition. 10 If a third party asserts that we infringe upon its proprietary rights, we could be required to redesign our products, pay significant royalties or enter into license agreements.

Our Certificate of Incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock, par value $0.001 per share, without shareholder approval and on terms established by our board of directors, of which 264,000 shares have been designated as Series A Preferred, 5,000 shares have been designated as Series B Preferred, 11,000 shares have been designated as Series C Preferred and 4,200 shares have been designated as Series D Preferred.

Our Certificate of Incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock, par value $0.001 per share, without stockholder approval and on terms established by our board of directors, of which 264,000 shares have been designated as Series A Preferred, 5,000 shares have been designated as Series B Preferred, 11,000 shares have been designated as Series C Preferred and 4,200 shares have been designated as Series D Preferred.

As a result, they are able to devote greater resources to the development, promotion and sale of their products than we can. 11 If our products fail to perform properly due to undetected errors or similar problems, our business could suffer, and we could face product liability exposure.

As a result, they are able to devote greater resources to the development, promotion and sale of their products than we can. 9 If our products fail to perform properly due to undetected errors or similar problems, our business could suffer, and we could face product liability exposure.

Acquisitions could involve substantial investment of funds or financings by issuance of debt or equity securities and could result in one-time charges and expenses and have the potential to either dilute the interests of existing shareholders or result in the issuance or assumption of debt.

Acquisitions could involve substantial investment of funds or financings by issuance of debt or equity securities and could result in one-time charges and expenses and have the potential to either dilute the interests of existing stockholders or result in the issuance or assumption of debt.

The length of our sales cycle can alternate markedly, which could result in significant fluctuations in license revenues being recognized from quarter to quarter. The decision by a customer to purchase our products often involves the development of a complex implementation plan across a customer’s business.

The length of our sales cycle can alternate markedly, which could result in significant fluctuations in the recognition of license revenues from quarter to quarter. The decision by a customer to purchase our products often involves the development of a complex implementation plan across a customer’s business.

There may be a limited market for our common stock, which may make it more difficult for you to sell your stock and which may reduce the market price of our common stock. The average shares traded per day in fiscal 2022 was approximately 286,000 shares per day compared to approximately 2,839,000 for fiscal 2021, and 484,000 for fiscal 2020.

There may be a limited market for our common stock, which may make it more difficult for you to sell your stock and which may reduce the market price of our common stock. The average shares traded per day in fiscal 2023 was approximately 56,000 shares per day compared to approximately 286,000 for fiscal 2022, and 2,839,000 for fiscal 2021.

We are dependent on the efforts of our key management personnel. The loss of any of our key management personnel, or our inability to recruit and train additional key management and other personnel in a timely manner, could materially and adversely affect our business, operations and future prospects. We maintain a key man insurance policy covering our Chief Executive Officer.

The loss of any of our key management personnel, or our inability to recruit and train additional key management and other personnel in a timely manner, could materially and adversely affect our business, operations and future prospects. We maintain a key man insurance policy covering our Chief Executive Officer.

If we are unable to successfully compete for new business and license renewals, our revenue growth and operating margins may decline. The market for our platforms and web development services are competitive and rapidly changing. Barriers to entry in such markets are relatively low.

Alternatively, if a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

Such pricing pressures and increased competition generally could result in reduced sales, reduced margins or the failure of our product and service offerings to achieve or maintain more widespread market acceptance. The marketplace is highly fragmented with a large number of competitors and potential competitors. Our prominent public company competitors include companies such as Coveo, Elastic, Semrush and WeCommerce.

Such pricing pressures and increased competition generally could result in reduced sales, reduced margins or the failure of our product and service offerings to achieve or maintain more widespread market acceptance. The marketplace is highly fragmented with a large number of competitors and potential competitors. Our competitors include companies such as Algolia, Bloomreach, Coveo, Searchspring, Semrush, Sitecore and Yext.

If we fail to obtain acceptable funding when needed, we may not have sufficient resources to fund our operations, and this would have a material adverse effect on our business. A reduction in our license renewal rate could reduce our revenue.

Further, our ability to obtain financing may be limited by rules of the Nasdaq Stock Market. If we fail to obtain acceptable funding when needed, we may not have sufficient resources to fund our operations, and this would have a material adverse effect on our business. A reduction in our license renewal rate could reduce our revenue.

We depend on financing sources, either debt or equity, or a combination thereof, which may not be available to us in a timely basis if at all, or on terms acceptable to us. Further, our ability to obtain financing may be limited by rules of the NASDAQ Capital Market.

We may require additional financing to execute our business plan and further expand our operations. We may require additional funding to further expand our operations. We depend on financing sources, either debt or equity, or a combination thereof, which may not be available to us in a timely basis if at all, or on terms acceptable to us.

During fiscal 2022, the closing price of our common stock as reported by NASDAQ fluctuated between $1.10 and $4.12. We are required to meet certain financial criteria in order to maintain our listing on the NASDAQ Capital Market. One such requirement is that we maintain a minimum closing bid price of at least $1.00 per share for our common stock.

During fiscal 2023, the closing price of our common stock as reported by the Nasdaq Capital Market fluctuated between $0.82 and $1.42. We are required to meet certain financial criteria in order to maintain our listing on the Nasdaq Capital Market.

If we fail this requirement then NASDAQ will issue a notice that we are not in compliance and we will need to take corrective actions in order to not be delisted. Such corrective actions could include a reverse stock split, which may adversely affect the liquidity of our common stock.

One such requirement is that we maintain a minimum closing bid price of at least $1.00 per share for our common stock. If we fail this requirement then Nasdaq will issue a notice that we are not in compliance and we will need to take corrective actions in order to not be delisted.

Additionally, there is no way to guarantee that such a measure, if implemented, would help us regain compliance with the minimum bid price requirement or maintain compliance with other NASDAQ listing rules. We are dependent upon our management team and the loss of any of these individuals could harm our business.

Such corrective actions could include a reverse stock split, which may adversely affect the liquidity of our common stock. Additionally, there is no way to guarantee that such a measure, if implemented, would help us regain compliance with Nasdaq's minimum bid price requirement or maintain compliance with its other listing rules.

If we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. We may require additional financing to execute our business plan and further expand our operations. We may require additional funding to further expand our operations.

Because of the numerous risks and uncertainties associated with our business, we are unable to predict the extent of any future losses or when we may become profitable. If we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

We incurred net income of approximately $2.2 million for the year ended September 30, 2022, which includes income related to the change in the fair value of warrant liabilities. Since our inception in 2000 and through fiscal 2019, and in fiscal 2021, we have incurred net losses, and may do so again.

We incurred net loss of approximately $9.4 million for the year ended September 30, 2023, which includes gains related to the change in the fair value of warrant liabilities and a goodwill impairment charge of $7.5 million.

Removed

In July 2021, the Company received approximately $5.8 million in cash relating the issuance of 1,543,779 shares of its common stock upon exercise of Series A Warrants, originally issued in March 2019, with an exercise price of $4.00 per share.

Added

We are dependent upon our management team and the loss of any of these individuals could harm our business. We are dependent on the efforts of our key management personnel.

Removed

On May 14, 2021, the Company offered and sold, in a registered direct offering, a total of 1,060,000 shares of its common stock at a price of $2.28 per share.

Added

Our business can be impacted by geopolitical events, trade and other international disputes, war, terrorism, natural disasters, public health issues, and other business interruptions.

Removed

On the same day, the Company entered into securities purchase agreements with certain institutional investors in connection with a private placement of 2,700 shares of newly designated Series D Convertible Preferred Stock at a price of $1,000 per share and warrants to purchase up to an aggregate of 592,105 shares of common stock at an exercise price of $2.51 per share.

Added

Geopolitical events, trade and other international disputes, war, terrorism, natural disasters, public health issues, and other business interruptions can adversely impact international commerce and the global economy, and could have a material adverse effect on our business, customers, employees, and partners.

Removed

The aggregate proceeds, net of cash paid for certain fees due to placement agents and transaction related expenses, of these two transactions that occurred on the same day was $4.6 million.

Removed

On February 4, 2021, the Company offered and sold a total of 880,000 shares of its common stock, par value $0.001 per share, to certain institutional and accredited investors at a public offering price of $3.10 per share in a registered direct offering.

Removed

The aggregate proceeds from this transaction, net of certain fees due to placement agents and transaction expenses, was approximately $2.5 million.

Removed

In connection with the acquisition of HawkSearch completed during the third quarter of fiscal year 2021, the Company recognized an obligation for a deferred payment representing a portion of the purchase price of $2.0 million payable on or before December 31, 2021, and contingent earn-out payments of $2.2 million (acquisition date fair value) which are payable, no later than December 31, 2022 (subsequently amended), and may vary in amount in the event of achievement of certain revenue targets and operational goals.

Removed

In connection with the acquisition of WooRank completed during the second quarter of fiscal year 2021, the Company (1) assumed the outstanding long-term debt obligations of $2.1 million of the acquiree, (2) issued a seller note of $352 thousand to one of the selling shareholders payable over a five-year period, (3) deferred a portion of the purchase price of $376 thousand, and (4) recognized contingent earn-out payments of $1.3 million (acquisition date fair value) which were payable in the event of achievement of certain revenue targets and operational goals. 9 On August 17, 2020, the Company entered into an arrangement with an investment banking firm to sell up to $4,796,090 of shares of the Company’s common stock, $0.001 par value.

Removed

There are no obligations for the sale or purchase of the Company’s common stock pursuant to this offering. Accordingly, there can be no assurances that the Company or investment banking firm will be successful in selling any portion of the shares available for sale pursuant to this offering.

Removed

On December 18, 2020, the Company delivered written notice to Roth Capital Partners that it was suspending all offers and sales under the At the Market Offering Agreement, during which time the Company will not make any sales of Placement Shares. On August 17, 2021, the ATM offering expired unused.

Removed

The COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments. In 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the virus continues to spread in areas where we operate and sell our services.

Removed

The COVID-19 pandemic and similar issues in the future could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.

Removed

Several public health organizations have recommended, and some governments have implemented, certain measures to slow and limit the transmission of the virus, including shelter in place, social distancing ordinances, and business shutdowns.

Removed

There is considerable uncertainty regarding the extent to which the COVID-19 outbreak will continue to spread, and the extent and duration of governmental and other measures implemented to try to limit the spread of the virus.

Removed

The pandemic and such preventive measures, or others required or that we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, increased claims or other expenses, potential border closures, and others.

Removed

These disruptions and challenges may continue for an indefinite period of time and may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments.

Removed

Additionally, the effects of COVID-19 on the global economy could adversely affect our ability to access the capital and other financial markets, and if so, we may need to consider alternative sources of funding for some of our operations and for working capital, which may increase our cost of, as well as adversely impact our access to, capital.

Removed

These uncertain economic conditions may also result in the inability of our customers to make payments to us, on a timely basis or at all.

Removed

Although these disruptions may continue to occur, the long-term economic impact and near-term financial impacts of the COVID-19 pandemic, including but not limited to, possible impairment, restructuring, and other charges, cannot be reliably quantified or estimated at this time due to the uncertainty of future developments. 15 Item 1B. Unresolved Staff Comments None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed0 unchanged

2022 filing

2023 filing

Biggest changeItem 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities. Market Information Our common stock is currently traded on The NASDAQ Stock Market LLC, under the trading symbol “BLIN”. Number of Shareholders As of December 10, 2022, we had approximately 60 stockholders of record.

Biggest changeItem 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is currently traded on the Nasdaq Capital Market under the trading symbol “BLIN”. Number of Stockholders As of December 27, 2023, we had approximately 60 stockholders of record.

Since many stockholders choose to hold their shares under the name of their brokerage firm, we estimate that the actual number of stockholders was over 6,000. Dividend Policy We have not declared or paid cash dividends on our common stock and do not plan to pay cash dividends to our common shareholders in the near future.

Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities There were no sales of unregistered or registered equity securities during the fiscal year ended September 30, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+5 added−20 removed50 unchanged

2022 filing

2023 filing

Biggest change(in thousands) Years Ended September 30, $ % 2022 2021 Change Change Net Revenue Digital engagement services $ 3,259 $ 3,296 $ (37 ) (1 )% % of total net revenue 19 % 25 % Subscription and perpetual licenses 13,560 9,963 3,597 36 % % of total net revenue 81 % 75 % Total net revenue 16,819 13,259 3,560 27 % Cost of revenue Digital engagement services 1,759 1,743 16 1 % % of digital engagement services revenue 54 % 53 % Subscription and perpetual licenses 3,358 2,790 568 20 % % of subscription and perpetual revenue 25 % 28 % Total cost of revenue 5,117 4,533 584 13 % Gross profit 11,702 8,726 2,976 34 % Gross profit margin 70 % 66 % Operating expenses Sales and marketing 5,232 2,726 2,506 92 % % of total revenue 31 % 21 % General and administrative 3,387 2,359 1,028 44 % % of total revenue 20 % 18 % Research and development 3,217 2,387 830 35 % % of total revenue 19 % 18 % Depreciation and amortization 1,599 1,202 397 33 % % of total revenue 10 % 9 % Restructuring and acquisition related expenses 164 1,235 (1,071 ) (87 )% % of total revenue 1 % 9 % Total operating expenses 13,599 9,909 3,690 37 % Loss from operations (1,897 ) (1,183 ) (714 ) (60 )% Change in fair value of contingent consideration, interest expense and other, net 417 (883 ) 1,300 147 % Government grant income - 88 (88 ) (100 )% Change in fair value of warrant liabilities 3,655 (5,885 ) 9,540 162 % Income (loss) before income taxes 2,175 (7,863 ) 10,038 128 % Provision for (benefit from) income taxes 30 (1,174 ) 1,204 103 % Net income/(loss) $ 2,145 $ (6,689 ) $ 8,834 132 % Non-GAAP Measure: Adjusted EBITDA $ 196 $ 1,442 $ (1,246 ) (86 )% 19 Revenue Our revenue is derived from two sources: (i) digital engagement services and (ii) subscription and perpetual licenses.

Biggest change(in thousands) Year Ended September 30, $ % 2023 % 2022 % Change Change Net Revenue Subscription and perpetual licenses $ 12,742 80% $ 13,560 81% $ (818 ) (6)% Digital engagement services 3,143 20% 3,259 19% (116 ) (4)% Total net revenue 15,885 16,819 (934 ) (6 )% Cost of revenue Subscription and perpetual licenses 3,364 26% 3,358 25% 6 0% Digital engagement services 1,650 52% 1,759 54% (109 ) (6)% Total cost of revenue 5,014 32% 5,117 30% (103 ) (2 )% Gross profit 10,871 68% 11,702 70% (831 ) (7 )% Operating expenses Sales and marketing 4,757 30% 5,232 31% (475 ) (9)% General and administrative 3,173 20% 3,387 20% (214 ) (6)% Research and development 3,679 23% 3,217 19% 462 14% Depreciation and amortization 1,528 10% 1,599 10% (71 ) (4)% Goodwill impairment 7,517 47% - 0% 7,517 N/A Restructuring and acquisition related expenses 132 1% 164 1% (32 ) (20)% Total operating expenses 20,786 13,599 7,187 53% Loss from operations (9,915 ) (1,897 ) (8,018 ) 423% Change in fair value of contingent consideration, interest expense and other, net (189 ) 417 (606 ) (145)% Change in fair value of warrant liabilities 575 3,655 (3,080 ) (84)% Income (loss) before income taxes (9,529 ) 2,175 (11,704 ) (538)% Provision for (benefit from) income taxes (94 ) 30 (124 ) (413)% Net (loss) income $ (9,435 ) $ 2,145 $ (11,580 ) (540 )% Non-GAAP Measure: Adjusted EBITDA $ (309 ) $ 196 $ (505 ) (258 )% 17 Revenue Our revenue is derived from two sources: (i) Subscription and Perpetual licenses and (ii) Digital Engagement Services.

Revenue Recognition Overview The Company derives its revenue from two sources: (i) Software Licenses, which are comprised of subscription fees (“SaaS”), perpetual software licenses, and maintenance for post-customer support (“PCS”) on perpetual licenses, and (ii) Digital Engagement Services, which are professional services to implement our products such as web development, digital strategy, information architecture and usability engineering search.

Revenue Recognition Overview The Company derives its revenue from two sources: (i) Subscription and Perpetual Licenses, which are comprised of software subscription fees (“SaaS”), perpetual software licenses, and maintenance for post-customer support (“PCS”) on perpetual licenses, and (ii) Digital Engagement Services, which are professional services to implement our products such as web development, digital strategy, information architecture and usability engineering search.

The first partner category includes platforms such as Optimizely, BigCommerce, Adobe, Sitefinity and others. The Bridgeline software often embeds directly into these platforms through connectors and SDK solutions that Bridgeline develops in concert with each platform.

The first partner category includes platforms such as Adobe, BigCommerce, Optimizely, Sitefinity, Shopify and others. The Bridgeline software often embeds directly into these platforms through connectors and SDK solutions that Bridgeline develops in concert with each platform.

Although we believe that our allowances are adequate, if the financial condition of our clients deteriorates, resulting in an impairment of their ability to make payments, or if we underestimate the allowances required, additional allowances may be necessary, resulting in increased expense in the period in which such determination is made. 26 Accounting for Goodwill and Intangible Assets Goodwill is tested for impairment annually during the fourth quarter of every fiscal year and more frequently if events and circumstances indicate that the asset might be impaired.

Although we believe that our allowances are adequate, if the financial condition of our clients deteriorates, resulting in an impairment of their ability to make payments, or if we underestimate the allowances required, additional allowances may be necessary, resulting in increased expense in the period in which such determination is made. 23 Accounting for Goodwill and Intangible Assets Goodwill is tested for impairment annually during the fourth quarter of every fiscal year and more frequently if events and circumstances indicate that the asset might be impaired.

Further, our ability to offer or sell such securities may be limited by rules of the NASDAQ Capital Market. Off-Balance Sheet Arrangements At this time, the Company does not have any off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, other than our operating leases. Contractual Obligations We lease all of our office locations.

Further, our ability to offer or sell such securities may be limited by rules of the Nasdaq Stock Market. Off-Balance Sheet Arrangements At this time, the Company does not have any off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, other than our operating leases. Contractual Obligations We lease all of our office locations.

The remaining federal NOL carryforward of $5.9 million is indefinite. Net operating losses incurred after December 31, 2017 carry forward indefinitely. Internal Revenue Code Section 382 places certain limitations on the amount of taxable income that can be offset by NOL carryforwards after a change in control of a loss corporation.

The remaining federal NOL carryforward of $7.7 million is indefinite. Net operating losses incurred after December 31, 2017 carry forward indefinitely. Internal Revenue Code Section 382 places certain limitations on the amount of taxable income that can be offset by NOL carryforwards after a change in control of a loss corporation.

The Company has historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. The Company believes that future revenues and cash flows will supplement its working capital and it has an appropriate cost structure to support future revenue growth.

Capital Resources and Liquidity Outlook The Company has historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. The Company believes that future revenues and cash flows will supplement its working capital and it has an appropriate cost structure to support future revenue growth.

We consider the following accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment: ● Revenue recognition; ● Allowance for doubtful accounts; ● Accounting for goodwill and other intangible assets; ● Accounting for business combinations; and ● Accounting for stock-based compensation.

However, if performed, Section 382 may be found to limit potential future utilization of our NOL carryforwards. The Company also has approximately $46.8 million in state NOLs which expire on various dates through 2041.

However, if performed, Section 382 may be found to limit potential future utilization of our NOL carryforwards. The Company also has approximately $45.4 million in state NOLs which expire on various dates through 2041.

Allocate the transaction price to the distinct performance obligations; and 5. Recognize revenue as the performance obligations are satisfied. 25 1.

Allocate the transaction price to the distinct performance obligations; and 5. Recognize revenue as the performance obligations are satisfied. 22 1.

Estimated forfeiture rates are updated for actual forfeitures quarterly. We also consider, each quarter, whether there have been any significant changes in facts and circumstances that would affect our forfeiture rate. Although we estimate forfeitures based on historical experience, actual forfeitures in the future may differ.

We also consider, each quarter, whether there have been any significant changes in facts and circumstances that would affect our forfeiture rate. Although we estimate forfeitures based on historical experience, actual forfeitures in the future may differ.

The loss from operations for fiscal 2022 was $1.9 million, compared with a loss from operations of $1.2 million for fiscal 2021.

The loss from operations for fiscal 2023 was $9.9 million, compared with a loss from operations of $1.9 million for fiscal 2022.

In addition, integrating acquired companies into our existing operations allows us to consolidate the finance, human resources, legal, marketing, and research and development of the acquired businesses with our own internal resources. This integration may reduce the aggregate of such expenses for the combined businesses and similarly improve operating results.

The increase in the gross profit margin for fiscal 2022 compared to fiscal 2021 is primarily attributable to the increase in the proportion of license revenue, which is generally associated with higher margins, to digital engagement service revenue.

The decrease in the gross profit margin for fiscal 2023 compared to fiscal 2022 is primarily attributable to the decrease in the proportion of subscription and perpetual license revenue, which is generally associated with higher margins, to digital engagement service revenue.

The change in cash used in operating activities compared to the prior period was primarily due to an increase in net earnings partially offset by changes in non-cash items, including changes in fair value of warrant liabilities, and changes to accounts payable and accrued liabilities as well as deferred revenue.

The change in cash used in operating activities compared to the prior period was primarily due to a decrease in net earnings and changes in non-cash items, including changes in fair value of warrant liabilities and goodwill impairment, and changes to accounts payable and accrued liabilities as well as deferred revenue.

Cash used in financing activities during fiscal 2022 was primarily related to deferred purchase price and contingent consideration payments related to acquisitions completed during fiscal 2021.

Cash used in financing activities during both fiscal 2023 and fiscal 2022 was primarily related to payments of long-term debt and deferred purchase price and contingent consideration payments related to acquisitions completed during fiscal 2021.

Investing Activities Cash used in investing activities was $0.2 million during fiscal 2022 compared to cash used in investing activities of $4.5 million during fiscal 2021. Cash used in investing activities during fiscal 2022 related primarily to software development capitalized costs and purchases of property and equipment.

Cash used in investing activities during fiscal 2022 was primarily related to capitalized software development costs and purchases of property and equipment. Financing Activities Cash used in financing activities was $0.6 million during fiscal 2023 compared with $5.5 million during fiscal 2022.

We may make additional acquisitions in the foreseeable future. These potential acquisitions will be consistent with our growth strategy by providing Bridgeline with new geographical distribution opportunities, an expanded customer base, an expanded sales force and an expanded developer force.

These potential acquisitions will be consistent with our growth strategy by providing Bridgeline with new geographical distribution opportunities, an expanded customer base, an expanded sales force and an expanded developer force.

We had a net income for fiscal 2022 of $2.1 million, which included a gain of approximately $3.7 million as a result of the change in fair value of certain warrant liabilities, compared with a net loss of $6.7 million, which included a loss of approximately $5.9 million as a result of the change in fair value of certain warrant liabilities and a $1.2 million discrete benefit in taxes in fiscal 2021.

We had a net loss for fiscal 2023 of $9.4 million, which included income of approximately $0.6 million as a result of the change in fair value of certain warrant liabilities, and a goodwill impairment charge of $7.5 million in fiscal 2023, compared with a net income of $2.1 million, which included income of approximately $3.7 million as a result of the change in fair value of certain warrant liabilities fiscal 2022.

As of September 30, 2022 and 2021, the Company had a valuation allowance on its net deferred tax assets of $10.5 million and $10.1 million, respectively. The Federal NOL carryforward is approximately $27.8 million as of September 30, 2022 of which $21.9 million is subject to the 20-year carryforward and expire on various dates through 2039.

As of September 30, 2023 and 2022, the Company had a valuation allowance on its net deferred tax assets of $10.8 million and $10.5 million, respectively. The Federal NOL carryforward is approximately $37.3 million as of September 30, 2023 of which $29.6 million is subject to the 20-year carryforward and expire on various dates through 2038.

Basic net income (loss) per share attributable to common shareholders for fiscal 2022 was $0.21 compared with the equivalent basic net loss per share attributable to common shareholders of ($1.47) for fiscal 2021.

Basic net loss per share attributable to common stockholders for fiscal 2023 was $(0.91) compared with the equivalent basic net income per share attributable to common stockholders of $0.21 for fiscal 2022.

Diluted net income (loss) per share attributable to common shareholders for fiscal 2022 was $0.20 compared with the equivalent diluted net loss per share attributable to common shareholders of ($1.47) for fiscal 2021.

Diluted net loss per share attributable to common stockholders for fiscal 2023 was $(0.91) compared with the equivalent diluted net income per share attributable to common stockholders of $0.20 for fiscal 2022.

For the years ended September 30, 2022 and 2021, no customers exceeded 10% of the Company’s total revenue. 18 Summary of Results of Operations Total revenue for the fiscal year ended September 30, 2022 (“fiscal 2022”) increased to $16.8 million from $13.3 million for the fiscal year ended September 30, 2021 (“fiscal 2021”).

For the years ended September 30, 2023 and 2022, no customers exceeded 10% of the Company’s total revenue. 16 Summary of Results of Operations Total revenue for the fiscal year ended September 30, 2023 (“fiscal 2023”) decreased to $15.9 million from $16.8 million for the fiscal year ended September 30, 2022 (“fiscal 2022”).

These companies are generally categorized in the following vertical markets: ● Distributors and Wholesalers ● Multi-Unit Franchises & Enterprises ● Manufacturers ● eCommerce Retailers ● Industrial Distribution (Electrical, Plumbing, Building, Cleaning, Restaurant, Furniture Suppliers) ● Health Services and Life Sciences ● High Technology (software and hardware) ● Credit Unions and Regional Banks ● Associations and Foundations Each of the Bridgeline companies goes to market through two main types of partnerships.

These companies are generally categorized in the following vertical markets: ● Associations and Foundations ● Banks and Credit Unions ● eCommerce Retailers ● Franchises & Enterprises ● Health Services and Life Sciences ● Industrial Distribution and Wholesale ● Manufacturers ● Technology Each of the Bridgeline companies goes to market through two main types of partnerships.

Digital Engagement Services Digital engagement services revenue is comprised of implementation and retainer-related services. Total revenue from digital engagement services of $3.3 million in fiscal 2022 decreased 1% from $3.3 million in fiscal 2021. Digital engagement services revenue as a percentage of total revenue decreased to 19% in fiscal 2022 from 25% in fiscal 2021.

Subscription and perpetual license revenue as a percentage of total revenue decreased to 80% in fiscal 2023 from 81% in fiscal 2022. Digital Engagement Services Digital engagement services revenue is comprised of implementation and retainer-related services. Total revenue from digital engagement services of $3.1 million in fiscal 2023 decreased 4% from $3.3 million in fiscal 2022.

The increase in cost of subscription and perpetual licenses in fiscal 2022 compared to fiscal 2021 is primarily due to higher costs to operate our cloud-based hosting model with Amazon Web Services and additional personnel costs, including costs incurred related to the business acquisitions during fiscal 2021.

The increase in cost of subscription and perpetual licenses in fiscal 2023 compared to fiscal 2022 is primarily due to higher costs to operate our cloud-based hosting model with Amazon Web Services, offset by a decrease in personnel costs.

Operating Expenses Sales and Marketing Expenses Sales and marketing expenses of $5.2 million in fiscal 2022 increased $2.5 million, or 92%, from $2.7 million in fiscal 2021. Sales and marketing expense as a percentage of total revenue increased to 31% in fiscal 2022 compared to 21% in fiscal 2021.

Operating Expenses Sales and Marketing Expenses Sales and marketing expenses of $4.8 million in fiscal 2023 decreased $0.5 million, or 9%, from $5.2 million in fiscal 2022. Sales and marketing expense as a percentage of total revenue decreased to 30% in fiscal 2023 compared to 31% in fiscal 2022.

The gross obligations for operating leases and subleases is $0.6 million of which $0.2 million is expected in the next twelve months. Debt payments on the Company’s various debt obligations total $1.0 million of which $0.4 million is expected to be paid in the next twelve months.

The gross obligations for operating leases and subleases is $0.4 million of which $0.2 million is expected in the next twelve months.

Net operating loss (“NOL”) carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company maintains a valuation allowance against its net deferred tax assets.

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company maintains a valuation allowance against its net deferred tax assets.

Cost of Subscription and Perpetual License Cost of subscription and perpetual licenses of $3.4 million in fiscal 2022 increased $0.6 million, or 20%, from $2.8 million in fiscal 2021.

Cost of Subscription and Perpetual License Cost of subscription and perpetual licenses of $3.4 million in fiscal 2023 increased slightly from fiscal 2022.

All of our software is available through a cloud-based software as a service (“ SaaS ”) model. Additionally, Unbound and HawkSearch are available via a traditional perpetual licensing business model, in which the software resides on a dedicated infrastructure in either the customer’s facility, or manage-hosted by Bridgeline via a cloud-based hosted services model.

Additionally, Unbound and HawkSearch have the option to be available via a traditional perpetual licensing business model, in which the software can reside on a dedicated infrastructure either on premise at the customer’s facility, or manage-hosted by Bridgeline via a cloud-based, dedicated hosted services model.

Consequently, the impact of such resulted in the release of $1.2 million of the pre-existing valuation allowance against the deferred tax assets and corresponding deferred tax benefit recognized during fiscal 2021. 22 Adjusted EBITDA We also measure our performance based on a non-GAAP (“Generally Accepted Accounting Principles”) measurement of earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, impairment of goodwill and intangible assets, non-cash warrant related income/expense, other income and expenses, change in fair value of derivative instruments, change in fair value of contingent consideration, and restructuring and acquisition related charges (“Adjusted EBITDA”).

We recognize deferred tax assets for stock-based awards that result in deductions on our income tax returns, based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in which we will receive a tax deduction. 19 Adjusted EBITDA We also measure our performance based on a non-GAAP (“Generally Accepted Accounting Principles”) measurement of earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, impairment of goodwill and intangible assets, non-cash warrant related income/expense, other income and expenses, change in fair value of derivative instruments, change in fair value of contingent consideration, and restructuring and acquisition related charges (“Adjusted EBITDA”).

The cost of total digital engagement services as a percentage of total digital engagement services revenue increased to 54% in fiscal 2022 from 53% in fiscal 2021.

Cost of Digital Engagement Services Cost of digital engagement services decreased 6%, to $1.7 million in fiscal 2023 from $1.8 million in fiscal 2022. The cost of total digital engagement services as a percentage of total digital engagement services revenue decreased to 52% in fiscal 2023 from 54% in fiscal 2022.

In connection with an acquisition of a business completed in the Company’s 2021 fiscal year, contingent consideration obligations total $0.3 million, which was paid in October 2022. 24 Critical Accounting Policies and Estimates These critical accounting policies and estimates by our management should be read in conjunction with Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements that were prepared in accordance with U.S.

Debt payments on the Company’s various debt obligations total $0.7 million of which $0.3 million is expected to be paid in the next twelve months. 21 Critical Accounting Policies and Estimates These critical accounting policies and estimates by our management should be read in conjunction with Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements that were prepared in accordance with U.S.

During the years ended September 30, 2022 and 2021, change in fair value of contingent consideration, interest expense and other, net, was $0.4 million of gain in fiscal 2022 compared to a loss of $0.9 million in fiscal 2021, and included non-recurring non-operating costs.

Change in fair value of contingent consideration, interest expense and other, net The change in fair value of contingent consideration, interest expense and other, net, was $0.2 million of expense in fiscal 2023, which primarily consisted of non-recurring non-operating costs, compared to $0.4 million of income in fiscal 2022, which primarily consisted of the change in fair value of contingent consideration.

The cost of subscription and perpetual licenses as a percentage of subscription and perpetual license revenue decreased to 25% in fiscal 2022 from 28% in fiscal 2021.

The cost of subscription and perpetual licenses as a percentage of subscription and perpetual license revenue increased to 26% in fiscal 2023 from 25% in fiscal 2022. These increases are primarily due to the overall decrease in subscription and perpetual license revenue.

Research and Development Research and development expense of $3.2 million in fiscal 2022 increased $0.8 million, or 35%, from $2.4 million in fiscal 2021. Research and development expense as a percentage of total revenue increased to 19% in fiscal 2022 compared to 18% for fiscal 2021.

Research and development expense as a percentage of total revenue increased to 23% in fiscal 2023 compared to 19% for fiscal 2022.

We recognize stock-based compensation expense for share-based payments issued that are expected to vest on a straight-line basis over the service period of the award, which is generally three years. In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rate and reduce the expense over the recognition period.

Share-based payments (to the extent they are compensatory) are recognized in our consolidated statements of operations based on their fair values. We recognize stock-based compensation expense for share-based payments issued that are expected to vest on a straight-line basis over the service period of the award, which is generally three years.

GAAP operating performance measure) to Adjusted EBITDA: Years Ended September 30, 2022 2021 Net income (loss) $ 2,145 $ (6,689 ) Provision for income tax 30 (1,174 ) Change in fair value of contingent consideration, interest expense and other, net (417 ) 883 Government grant income - (88 ) Change in fair value of warrants (3,655 ) 5,885 Amortization of intangible assets 1,487 1,130 Depreciation and other amortization 121 72 Restructuring and acquisition related charges 164 1,235 Stock-based compensation 321 188 Adjusted EBITDA $ 196 $ 1,442 Adjusted EBITDA decreased year over year, which is primarily attributable to additional costs related to the business acquisitions during fiscal 2021 as well as additional sales and marketing spend. 23 Liquidity and Capital Resources Cash Flows Operating Activities Cash used in operating activities was $0.1 million during fiscal 2022 compared to $1.0 million during fiscal 2021.

GAAP operating performance measure) to Adjusted EBITDA: Year Ended September 30, 2023 2022 Net income (loss) $ (9,435 ) $ 2,145 Provision for income tax (94 ) 30 Change in fair value of contingent consideration, interest expense and other, net 189 (417 ) Change in fair value of warrants (575 ) (3,655 ) Amortization of intangible assets 1,378 1,487 Depreciation and other amortization 177 121 Goodwill impairment 7,517 - Restructuring and acquisition related charges 132 164 Stock-based compensation 402 321 Adjusted EBITDA $ (309 ) $ 196 20 Liquidity and Capital Resources Cash Flows Operating Activities Cash provided by operating activities was $0.3 million during fiscal 2023 compared to cash used in operating activities of $0.1 million during fiscal 2022.

The increase compared to the prior period is primarily attributable to higher personnel costs and additional sales and marketing costs, including such additional costs related to the business acquisitions during fiscal 2021. General and Administrative Expenses General and administrative expenses of $3.4 million in fiscal 2022 increased $1.0 million, or 44%, from $2.4 million in fiscal 2021.

The decrease compared to the prior period is primarily attributable to lower personnel costs and marketing spend on leads and conferences. General and Administrative Expenses General and administrative expenses of $3.2 million in fiscal 2023 decreased $0.2 million, or 6%, from $3.4 million in fiscal 2022.

These increases compared to the prior period are primarily attributable to personnel and other additional costs related to the business acquisitions during fiscal 2021. 21 Depreciation and Amortization Depreciation and amortization expense of $1.6 million in fiscal 2022 increased by $0.4 million, or 33%, from $1.2 million in fiscal 2021.

These increases compared to the prior period are primarily attributable to higher personnel costs. 18 Depreciation and Amortization Depreciation and amortization expense of $1.5 million in fiscal 2023 decreased by $0.1 million, or 4%, from $1.6 million in fiscal 2022. Depreciation and amortization as a percentage of total revenue remained consistent at 10% in fiscal 2023 and 2022.

The second category includes web-development agencies which typically have deep relationships with end-customers and have the technical expertise to implement the Bridgeline software solutions according to client needs, platform requirements, and industry standards. Acquisitions Bridgeline will continue to evaluate expanding its distribution of its suite of products and interactive development capabilities through acquisitions.

The second category includes web-development agencies which typically have deep relationships with end-customers and have the technical expertise to implement the Bridgeline software solutions according to client needs, platform requirements, and industry standards. Goodwill and Intangible Asset Impairment During the year ended September 30, 2023, the Company recognized a goodwill impairment charge of $7.5 million.

Woorank is a Search Engine Optimization (“SEO”) audit tool that generates an instant audit of the site’s technical, on-page, and off-page SEO.

Provision for Income Taxes The provision for (benefit from) income taxes was $30 thousand for fiscal 2022 and ($1.2) million for fiscal 2021, respectively. Income tax expense consists of estimated liability for federal and state income taxes owed by the Company.

Provision for Income Taxes The provision for (benefit from) income taxes was ($94) thousand for fiscal 2023 and $30 thousand for fiscal 2022. Income tax expense consists of estimated liability for federal and state income taxes owed by the Company. Net operating loss (“NOL”) carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented.

Change in fair value of contingent consideration, interest expense and other, net; Government grant income; Change in fair value of warrant liabilities The Company recognized a gain related to the change in fair value of warrant liabilities of $3.7 million, for the year ended September 30, 2022 and a loss related to the change in fair value of warrant liabilities of $5.9 million for the year ended September 30, 2021, respectively.

Change in fair value of warrant liabilities The Company recognized a gain related to the change in fair value of warrant liabilities of $0.6 million for fiscal 2023, and a gain related to the change in fair value of warrant liabilities of $3.7 million for fiscal 2022.

Sales and Marketing Bridgeline employs a direct sales force, which focuses its efforts on selling to mid-sized and large companies.

OrchestraCMS: the only content and digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees. 15 Sales and Marketing Bridgeline employs a direct sales force, which focuses its efforts on selling to mid-sized and large companies.

The decrease as a percentage of revenues is primarily due to the overall increases in subscription and perpetual license revenue. 20 Gross Profit Gross profit of $11.7 million increased $3.0 million, or 34%, in fiscal 2022 to compared to $8.7 million for fiscal 2021. The gross profit margin increased to 70% for fiscal 2022 compared to 66% for fiscal 2021.

These decreases are primarily due to the overall decrease in personnel costs. Gross Profit Gross profit of $10.9 million decreased $0.8 million, or 7%, in fiscal 2023 compared to $11.7 million for fiscal 2022. The gross profit margin decreased to 68% for fiscal 2023 compared to 70% for fiscal 2022.

The two plans are more fully described in Note 12 of these consolidated financial statements. The Company accounts for stock-based compensation awards in accordance with ASC 718, Compensation-Stock Topic of the Codification. Share-based payments (to the extent they are compensatory) are recognized in our consolidated statements of operations based on their fair values.

Accounting for Stock-Based Compensation At September 30, 2023, we maintained two stock-based compensation plans, one of which has expired but still contains vested stock options. The two plans are more fully described in Note 12 – Stockholders’ Equity of these consolidated financial statements. The Company accounts for stock-based compensation awards in accordance with ASC 718, Compensation-Stock Compensation .

Loss from Operations The loss from operations was $1.9 million for fiscal 2022 compared to a loss from operations of $1.2 million for fiscal 2021, an increase of $0.7 million or 60%.

During fiscal 2023 expenses incurred were related to severance and merger and acquisition costs and during fiscal 2022 expenses incurred were related to further acquisition integrations. Loss from Operations The loss from operations was $9.9 million for fiscal 2023 compared to a loss from operations of $1.9 million for fiscal 2022, a decrease of $8.0 million or 423%.

General and administrative expense as a percentage of revenue increased to 20% in fiscal 2022 compared to 18% in fiscal 2021. These increases are primarily due to additional costs related to the business acquisitions during fiscal 2021.

General and administrative expense as a percentage of revenue was 20% in fiscal 2023 and fiscal 2022. These decreases are primarily due to lower personnel costs. Research and Development Research and development expense of $3.7 million in fiscal 2023 increased $0.5 million, or 14%, from $3.2 million in fiscal 2022.

The deferred tax liabilities generated from the business combination netted against the Company’s pre-existing deferred tax assets.

The deferred tax liabilities generated from the business combination netted against the Company’s pre-existing deferred tax assets. Consequently, the impact of such resulted in the release of $1.2 million of the pre-existing valuation allowance against the deferred tax assets and corresponding deferred tax benefit recognized during fiscal 2021.

The Company re-measures this liability each reporting period and recognizes changes in the fair value through income (loss) before income taxes within the consolidated statements of operations. Accounting for Stock-Based Compensation At September 30, 2022, we maintained two stock-based compensation plans, one of which has expired but still contains vested stock options.

The Company re-measures this liability each reporting period and recognizes changes in the fair value through income (loss) before income taxes within the consolidated statements of operations. Accounting for Common Stock Purchase Warrants The Company evaluates common stock warrants as they are issued to determine whether they should be classified as an equity instrument or a liability.

Overview Bridgeline Digital is a marketing technology company that offers a suite of products that help companies grow online revenue and share information with customers, partners, and employees. HawkSearch is a search, recommendation, and personalization application, built for marketers, merchandisers, and developers that enhances, normalizes, and enriches a customer's site search and browse experience.

Overview Bridgeline Digital is a marketing technology company that offers a suite of products that help companies grow online revenue and share information with customers, partners, and employees. All of Bridgeline’s software is available through a cloud-based Software as a Service (“SaaS”) model, whose flexible architecture provides customers hosting and support.

HawkSearch leverages advanced artificial intelligence, machine learning and industry-leading analyzers to deliver accurate results from federated data sources. Celebros Search is a commerce-oriented site search product that provides Natural Language Processing with artificial intelligence to present relevant search results based on long-tail keyword searches in seven languages.

The decreases compared to the prior period are attributable to the increase in subscription and perpetual licenses, including additional revenue related to business acquisitions during fiscal 2021. Subscription and Perpetual Licenses Revenue from subscription (SaaS) and perpetual licenses increased $3.6 million, or 36%, to $13.6 million in fiscal 2022 from $10.0 million in fiscal 2021.

Subscription and Perpetual Licenses Revenue from Subscription and perpetual licenses decreased $0.8 million, or 6%, to $12.7 million in fiscal 2023 from $13.6 million in fiscal 2022. The decrease compared to the prior period included a reduction in revenue from a particular customer.

Cash used in investing activities during fiscal 2021 was primarily related to net cash paid for the purchase of businesses during the second and third fiscal quarters of 2021. Financing Activities Cash used in financing activities was $5.5 million during fiscal 2022 compared with cash provided of $13.5 million during fiscal 2021.

Investing Activities Cash used in investing activities was $25 thousand during fiscal 2023 compared to cash used in investing activities of $0.2 million during fiscal 2022. Cash used in investing activities during fiscal 2023 related primarily to purchases of property and equipment.

Cost of Revenue Total cost of revenue for fiscal 2022 of $5.1 million increased $0.6 million, or 13%, from $4.5 million. The increase for fiscal 2022 compared to fiscal 2021 is primarily attributable to costs incurred related to the business acquisitions during fiscal 2021.

Digital engagement services revenue as a percentage of total revenue increased to 20% in fiscal 2023 from 19% in fiscal 2022. Cost of Revenue Total cost of revenue for fiscal 2023 of $5.0 million decreased $0.1 million, or 2% compared to the prior period.

Removed

Woorank’s clear, actionable insights help companies increase their search ranking, website traffic, audience engagement, conversion, and customer retention rates. 17 Our Unbound platform is a Digital Experience Platform that includes Web Content Management, eCommerce, eMarketing, Social Media management, and Web Analytics.

Added

There were no goodwill impairment charges recognized during the year ended September 30, 2022. Acquisitions Bridgeline will continue to evaluate expanding its distribution of its suite of products and interactive development capabilities through acquisitions. We may make additional acquisitions in the foreseeable future.

Removed

The Unbound platform, combined with its professional services, assists customers in driving lead generation, increasing revenue, improving customer service and loyalty, enhancing employee knowledge, and reducing operational costs. Our TruPresence product empowers large franchises, brand networks, and other multi-unit organizations to manage a large hierarchy of digital properties at scale.

Added

Goodwill Impairment During the year ended September 30, 2023, the Company recognized a goodwill impairment charge of $7.5 million. There were no goodwill impairment charges recognized during the year ended September 30, 2022. Restructuring and Acquisition Related Expenses Restructuring and acquisition related expenses was $0.1 million in fiscal 2023, compared to $0.2 million in fiscal 2022.

Removed

OrchestraCMS is the only content and digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees; uniquely combining content with business data, processes and applications across any channel or device, including Salesforce Communities, social media, portals, intranets, websites, applications and services.

Added

Those warrants that are classified as a liability are carried at fair value at each reporting period, with changes in their fair value recognized in change in fair value of warrant liabilities in the consolidated statements of operations. The fair value of the Company’s warrant liabilities are valued utilizing Level 3 inputs.

Removed

On March 1, 2021, the Company, pursuant to a Share Purchase Agreement (the “WooRank Purchase Agreement”), acquired all of the issued and outstanding shares of WooRank SRL (“WooRank”), an entity located in Belgium.

Added

Warrant liabilities are valued using a Monte Carlo option-pricing model, which takes into consideration the volatilities of comparable public companies, due to the relatively low trading volume of the Company’s common stock. The Monte Carlo option-pricing model uses certain assumptions, including expected life and annual volatility.

Removed

Added

In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rate and reduce the expense over the recognition period. Estimated forfeiture rates are updated for actual forfeitures quarterly.

Removed

On the closing date, the Company issued 29,433 shares of its common stock, with an aggregate issuance date fair value of $99 thousand for a portion of the purchase price. The WooRank Purchase Agreement also provides for additional consideration, in the event of achievement of certain revenue targets and operational goals, to the selling shareholders.

Removed

The fair value of contingent consideration was $1.3 million on the acquisition date. On May 28, 2021, the Company, pursuant to a Share Purchase Agreement (the “Hawk Purchase Agreement”), acquired all of the issued and outstanding shares of HawkSearch, Inc., an Illinois corporation (“HawkSearch”).

Removed

The Hawk Purchase Agreement also provides for additional consideration, in the event of achievement of certain revenue targets, to the selling shareholders as an additional earn-out, payable in two installments, as amended and as follows: (i) the aggregate sum of $1,779 thousand which was paid on July 1, 2022; and (ii) the aggregate sum of $250 thousand, which was paid on October 3, 2022, as included within the Amendment to the Stock Purchase Agreement, dated June 15, 2022.

Removed

The fair value of contingent consideration was $250 thousand on September 30, 2022, all of which was paid in October 2022 Customer Information We currently have over 2,000 active customers.

Removed

The increase compared to the prior period is primarily due to significant multi-year license renewals across our diverse portfolio of companies and the inclusion of a full year of revenue from the Company’s fiscal 2021 acquisitions compared to fiscal 2021, which only included revenues from the acquisition date to period end.

Removed

Subscription and perpetual license revenue as a percentage of total revenue increased to 81% in fiscal 2022 from 75% in fiscal 2021. The increase as a percentage of total revenue is attributable to the increase in subscription licenses, including renewals and additional revenue related to the business acquisitions during fiscal 2021.

Removed

Cost of Digital Engagement Services Cost of digital engagement services increased 1%, to $1.8 million in fiscal 2022 from $1.7 million in fiscal 2021. The increase in cost of digital engagement services in fiscal 2022 compared to fiscal 2021 is primarily due to personnel costs, including costs incurred related to the business acquisitions during fiscal 2021.

Removed

The increase as a percentage of revenues in fiscal 2022 compared to fiscal 2021 is primarily due to the overall decrease in digital engagement services revenue and costs incurred related to business acquisitions during fiscal 2021, as noted above.

Removed

Depreciation and amortization as a percentage of total revenue increased to 10% in fiscal 2022 compared to 9% in fiscal 2021. These increases are primarily due to amortization of intangible assets resulting from business acquisitions during fiscal 2021.

Removed

During the year ended September 30, 2021, the Company recognized government grant income of $88 thousand associated with proceeds received under the PPP deemed probable to be forgiven based on the actual expenditures for qualified expenses during the period. As of the first quarter of fiscal 2021, the Company expended all loan proceeds on qualified expenses incurred during the period.

Removed

The Company applied for full PPP loan forgiveness on March 29, 2021 and received approval from the U.S. Small Business Administration’s (the “SBA”) in August 2021. During the first quarter of fiscal 2021, the remaining loan proceeds were expended on qualified expenses and as a result, the Company recognized $88 thousand of government grant income.

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Top changes in Bridgeline Digital, Inc.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other BLIN 10-K year-over-year comparisons