What changed in this filing

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Item 9A. Controls and Procedures

2020-12-23 compared with 2019-12-27 · 53 added, 148 removed, 442 unchanged (31% of the section changed)

11 unchanged sentences

In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control-Integrated Framework .

Our management has concluded that as of September 30, 2019, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles.

Our management reviewed the results of their assessment with our Board of Directors.

Our management has concluded that as of September 30, 2020, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

generally accepted accounting principles.

Our management reviewed the results of its assessment with our Board of Directors.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to a permanent exemption from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

Inherent L imitations on E ffectiveness of C ontrols

Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting has inherent limitations which include but are not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors.

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Internal control over financial reporting also can be circumvented by collusion or improper management override.

Provided its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Provided its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis;

however, these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

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Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal controls over financial reporting that occurred during the fiscal quarter ended September 30, 2019 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

There have been no significant changes in our internal controls over financial reporting that occurred during the fiscal year ended September 30, 2020 that have materially, or are reasonably likely to materially affect, our internal controls over financial reporting.

OTHER INFORMATION

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Joni Kahn has been a member of our Board of Directors since April 2012.

Joni Kahn and Mr.

Roger Kahn, the Company’s President and Chief Executive Officer, are not related.

In May 2015, Ms.

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From 2002 to 2005, Ms.

Kahn was the Senior Group Vice President for worldwide professional services for Business Objects, a business intelligence software maker based in San Jose, where she led the applications and services division that supported that company's transformation from a products company to an enterprise solutions company.

Kahn was the Senior Group Vice President for worldwide professional services for Business Objects, a business intelligence and analytics software maker based in San Jose, where she led the applications and services division that supported that company's transformation from a products company to an enterprise solutions company.

Business Objects was acquired by SAP in 2007.

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Kahn brings extensive leadership experience to our Board and our Audit Committee as an experienced senior executive.

Kahn has over thirty years of executive level managerial, operational, and strategic planning experience leading world-class sales, service and support technology organizations.

Her service on prior boards also provides financial and governance experience.

Kahn brings extensive leadership experience to our Board and our Audit Committee as an experienced senior executive.

Kahn has over thirty years of executive level managerial, operational, and strategic planning experience leading world-class service and support technology organizations.

Her service on prior boards also provides financial and governance experience.

The Board of Directors has determined that Ms.

Kahn’s vast experience in the technology industry and finance, as well as her executive leadership, makes her qualified to continue as the Chairperson and member of our Board of Directors.

Kenneth Galaznik has been a member of our Board of Directors since 2006.

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Galaznik brings extensive experience to our Board and our Audit Committee as an experienced senior executive, a financial expert, and as chief financial officer of a publicly held company.

The Board of Directors has determined that Mr.

Galaznik’s deep experience in finance and his executive leadership make him qualified to continue as a member of our Board of Directors.

Scott Landers has been a member of our Board of Directors since 2010.

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on January 1, 2016 after serving as the company’s Chief Operating Officer since early 2015 and its Chief Financial Officer, Treasurer and Assistant Secretary since joining Monotype in July 2008.

Monotype is a publicly-held company and is a leading provider of typefaces, technology and expertise that enable the best user experiences and sure brand integrity.

Effective October 11, 2019, Monotype was acquired by HGGC and is now a privately-owned company and is a leading provider of typefaces, technology and expertise that enable the best user experiences and sure brand integrity.

Prior to joining Monotype, from September 2007 until July 2008, Mr.

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Landers brings extensive experience to our Board and our Audit Committee as an experienced senior executive, a financial expert, and as chief executive officer and a chief financial officer of a publicly-held company.

Our Board of Directors has determined that Mr.

Lander’s financial skills, public-company experience, strategic business acumen and executive leadership make him a qualified to continue as a member of our Board of Directors.

Michael Taglich has been a member of our Board of Directors since 2013.

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focuses on public and private micro-cap companies in a wide variety of industries.

He is currently the Chairman of the Board of each Air Industries Group Inc., a publicly traded aerospace and defense company (NYSE AIRI), and BioVentrix, Inc., a privately held medical device company whose products are directed at heart failure treatment.

He also serves as a director of a number of other private companies, and is a director of Icagen Inc, a drug screening company.

He is currently the Chairman of the Board of Air Industries Group Inc., a publicly traded aerospace and defense company (NYSE AIRI), and Mare Island Dry Dock Inc., a privately-held company.

He also serves as a director of a number of other private companies.

Michael Taglich brings extensive professional experience which spans various aspects of senior management, including finance, operations and strategic planning.

Taglich has more than 30 years of financial industry experience and served on his first public company board over 20 years ago.

Roger Kahn was elected to the Board of Directors in December 2017.

Our Board of Directors has determined that Mr.

Taglich’s executive strategic business skills in both private and public companies, as well as his experience leading and advising high-growth companies, make him a qualified to continue as a member of our Board of Directors.

Roger Kahn has been a member of our Board of Directors since December 2017.

Kahn joined the Company as the Chief Operating Officer in August 2015 and has been our President and Chief Executive Officer since May 2016.

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As the General Manager and Chief Technology Officer of FatWire, Mr.

Kahn built the company into a global corporation with offices in thirteen countries and annual revenues of $40 million.

FatWire was acquired by Oracle in 2011 for $160 million.

Kahn built the company into a global corporation with offices in thirteen countries.

FatWire was acquired by Oracle in 2011.

Kahn received his Ph.D.

in Computer Science and Artificial Intelligence from the University of Chicago.

Kahn brings extensive experience to our Board as an experienced senior executive and industry expert.

As a prior chief operating officer, Mr.

Kahn brings extensive leadership experience in international business operations and strategic planning, and his Ph.D.

provides significant value to the Company’s technology footprint.

Our Board of Directors has determined that Mr.

Kahn’s vast experience as a successful entrepreneur in the technology space, as well as his technical and leadership acumen, make him qualified to continue as a member of our Board of Directors.

Downey has been our Executive Vice President and Chief Financial Officer and Treasurer since July 2019.

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These officers, directors and stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports that they file with the SEC.

With respect to fiscal 2018 and based solely on its review of the copies of such forms and amendments thereto received by it, the Company believes that all of the executive officers, directors, and owners of ten percent of the outstanding Common Stock complied all applicable filing requirements, except as follows:

Michael Taglich, a director and 6% stockholder of the Company, filed a Form 4 reporting three late transactions;

Scott Landers, a director of the Company, filed a Form 4 reporting two late transactions;

Joni Kahn, a director of the Company, filed a Form 4 reporting two late transactions;

Kenneth Galaznik, a director of the Company, filed a Form 4 reporting two late transactions.

With respect to fiscal 2020 and 2019 and based solely on its review of the copies of such forms and amendments thereto received by it, the Company believes that all of the executive officers, directors, and owners of ten percent of the outstanding Common Stock complied with all applicable filing requirements.

Code of Conduct and Ethics

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The Code of Ethics codifies the business and ethical principles that govern the Company's business.

Committees o f t he Board o f Directors

A copy of the Code of Ethics is available on the Company's website www.bridgeline.com.

The Company intends to post amendments to or waivers from its Code of Ethics (to the extent applicable to its principal executive officer, principal financial officer or principal accounting officer) on its website.

The Company's website is not part of this proxy statement.

Committees of the Board of Directors

The Company has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.

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A copy of such charter is available on the Company's website, www.bridgeline.com .

During Fiscal 2018, the Compensation Committee met six times and acted two times by unanimous written consent.

During Fiscal 2020, the Compensation Committee met five times.

Nominating and Corporate Governance Committee

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Summary Compensation Table

The following Summary Compensation Table sets forth the total compensation paid or accrued for the fiscal years ended September 30, 2019 and September 30, 2018 for our principal executive officer and our other two most highly compensated executive officers who served as executive officers during the year ended September 30, 2019.

The following Summary Compensation Table sets forth the total compensation paid or accrued for the fiscal years ended September 30, 2020 and September 30, 2019 for our principal executive officer and our other two most highly compensated executive officers who were serving as executive officers as of September 30, 2020.

We refer to these officers as our named executive officers.

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Executive Officer

Michael Prinn (1)

Former Executive Vice President

and Chief Financial Officer

Carole Tyner (2)

Former Chief Financial Officer

Executive Vice President

Chief Financial Officer and Treasurer

(1) Michael Prinn resigned as Executive Vice President and Chief Financial Officer effective September 25, 2018.

Carole Tyner (1)

Former Chief Financial Officer

(1) Carole Tyner resigned as Chief Financial Officer on August 31, 2019.

Effective July 1, 2019, Mark Downey was appointed as Executive Vice President, Chief Financial Officer and Treasurer.

(3) Amounts paid to Carole Tyner in fiscal 2019 represent severance of $110,000, unused vacation of $5,077 and COBRA of $1,112.

(2) Amounts paid to Carole Tyner in fiscal 2019 represented severance of $110,000, unused vacation of $5,077 and COBRA of $1,112.

Employment Agreements

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Carole Tyner resigned from her position of Chief Financial Officer of Bridgeline Digital, Inc.

("Bridgeline" or the "Company") to pursue new professional opportunities.

Tyner will continue to provide services to the Company as an employee until August 31, 2019.

Tyner's departure on August 31, 2019, she will receive a lump sum separation payment equivalent to six-months base salary, and further, she will continue to receive COBRA health insurance continuation benefits with the Employer portion of the premiums paid by the Company up through February 28, 2020.

(the "Company") to pursue new professional opportunities.

Tyner's departure on August 31, 2019, she received a lump sum separation payment equivalent to six-months base salary, and further, she continued to receive COBRA health insurance continuation benefits with the Employer portion of the premiums paid by the Company through February 28, 2020.

Effective July 1, 2019, Mark G.

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Downey entered into an employment agreement (the "Employment Agreement"), effective July 1, 2019 through September 30, 2020, whereby he will receive two-hundred and forty thousand dollars base salary and the ability to earn a bi-annual incentive bonus of thirty thousand dollars.

Downey may also participate in such equity-based and cash-based incentive programs as the Company may from time to time and made available to its executive officers, in accordance with the terms and conditions of such programs, as well as, the Company's other applicable employee benefits plans and programs.

His Employment Agreement also provides that in the event Mr.

Downey may also participate in such equity-based and cash-based incentive programs as the Company may from time to time make available to its executive officers, in accordance with the terms and conditions of such programs, as well as, the Company's other applicable employee benefits plans and programs.

His Employment Agreement, which has been renewed through September 2021, also provides that in the event Mr.

Downey's employment is terminated by the Company without cause or if the Company terminates his employment for good reason, he is entitled to receive severance benefits.

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The following table sets forth information concerning outstanding stock options for each named executive officer as of September 30, 2020.

Exercisable (1)

Unexercisable

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The following table sets forth information concerning the compensation paid to our non-employee directors during the fiscal year ended September 30, 2020.

Galaznik, Ken

Landers, Scott

Taglich, Michael

Scott Landers

Michael Taglich

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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In computing the number of shares beneficially owned by a person or a group and the percentage ownership of that person or group, shares of our common stock subject to options or warrants currently exercisable or exercisable within 60 days after December 23, 2020 are deemed outstanding, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated, the address of each individual named below is our address, 100 Summit Drive, Burlington, Massachusetts 01803.

The following tables set forth, as of December 27, 2019, the beneficial ownership of our Series A Preferred, Series C Preferred and Common Stock by (i) each person or group of persons known to us to beneficially own more than 5% of the outstanding shares of each class of the outstanding securities, (ii) each of our directors and named executive officers, and (iii) all of our executive officers and directors as a group.

At the close of business on December 27, 2019 there were 262,310 shares of Series A Preferred, 441 shares of our Series C Preferred and 12,798,475 shares of our Common Stock issued and outstanding.

Unless otherwise indicated, the address of each individual named below is our address, 100 Sylvan Road, Suite G-700, Woburn, Massachusetts 01801.

The following tables set forth, as of December 23, 2020, the beneficial ownership of our Series C Preferred and Common Stock by (i) each person or group of persons known to us to beneficially own more than 5% of the outstanding shares of each class of the outstanding securities, (ii) each of our directors and named executive officers, and (iii) all of our executive officers and directors as a group.

At the close of business on December 23, 2020 there were 350 shares of our Series C Preferred and 4,420,170 shares of our Common Stock issued and outstanding.

Except as indicated in the footnotes to the tables below, each stockholder named in the table has sole voting and investment power with respect to the shares shown as beneficially owned by such stockholder.

This information is based upon information received from or on behalf of the individuals named herein.

Series A Preferred Stock

Name and Address (1)

Percent of Shares

Robert Taglich

790 New York Avenue

Huntington, NY 11743

Alvin Fund, LLC

215 West 98 th Street, Apt.

New York, NY 10025

Shadow Capital, LLC

3601 SW 29 th Street

Topeka, KS 66614

Sterling Family Investment, LLC

12400 Dutch Forest PL

Edmond, OK 73013

All current executive officers and directors as a group

Each of our officers and directors are excluded from this table, as no officer or director currently holds shares of Series A Preferred.

Holders of Series A Preferred are entitled to vote on all matters presented to our stockholders on an as-converted basis.

Each share of Series A Preferred is convertible, at the option of each respective holder, into approximately 0.012 shares of our Common Stock.

Series C Preferred Stock

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Huntington, NY 11743

Orca Capital GMBH

Hettenshausen, Germany 85276

PC 4221 Wilshire Boulevard, STE 355

Los Angeles, CA 90010

Hudson Bay Master Fund Ltd.

777 3 rd Avenue, 30 th Floor

New York, NY 10017

All current executive officers and directors as a group

Each of our officers and directors are excluded from this table, as no officer or director currently holds shares of Series C Preferred.

Holders of Series C Preferred are entitled to vote on all matters presented to our stockholders on an as-converted basis.

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Includes 8 shares of Common Stock owned by Mr.

Launder’s children.

Lander’s children.

Includes 130 shares of Common Stock subject to currently exercisable options (includes options that will become exercisable within 60 days of December 23, 2020).

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Plan category

(excluding securities

reflected in column a) (c)

(excluding securities reflected in column a) (c)

Equity compensation plans approved by security holders

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Taglich has been issued warrants to purchase common stock totaling 1,080 shares at an exercise price of $1,000.00 per share.

In connection with the Company’s private placement completed in November 2016, the Company issued to the Investors warrants to purchase an aggregate total of 4,271 shares common stock.

In connection with the Company’s private placement completed in November 2016, the Company issued to the Investors warrants to purchase an aggregate total of 4,271 shares of common stock.

Included were warrants to purchase 172 shares of common stock issued to Roger Kahn and warrants to purchase 308 shares of common stock issued to Michael Taglich.

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– Consolidated Statements of Operations for the years ending September 30, 2020 and 2019

– Consolidated Statements of Comprehensive Loss for the years ending September 30, 2019 and 2018

– Consolidated Statements of Comprehensive Income/(Loss) for the years ending September 30, 2020 and 2019

– Consolidated Statements of Shareholders’ Equity for the years ending September 30, 2020 and 2019

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October 19, 2018

Asset Purchase Agreement, dated as of May 11, 2010, by and between Bridgeline Digital, Inc.

and TMX Interactive, Inc.

Asset Purchase Agreement, dated as of July 9, 2010, by and between Bridgeline Digital, Inc.

and e.magination network, LLC

July 15, 2010

Agreement and Plan of Merger, dated as of October 3, 2011, by and among Bridgeline Digital, Inc., Magnetic Corporation and Jennifer Bakunas

October 6, 2011

Agreement and Plan of Merger, dated as of May 31, 2012, by and among Bridgeline Digital, Inc., MarketNet, Inc.

and Jill Bach

Amended and Restated Certificate of Incorporation, as amended

Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated May 4, 2015

Certificate of Designations of the Series A Convertible Preferred Stock

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December 14, 2018

Specimen Common Stock Certificate (File No.

June 20, 2007

Form of Warrant

October 19, 2018

Employment Agreement with Roger “Ari” Kahn, dated August 24, 2015

December 24, 2015

First Amendment to Employment Agreement, Roger “Ari” Kahn, dated May 10, 2016

Employment Agreement with Michael D.

Prinn dated January 19, 2011

January 21, 2011

Employment Agreement with Michael D.

Prinn dated November 11, 2016

February 14, 2017

Amended and Restated Stock Incentive Plan, as amended

July 14, 2014

Securities Purchase Agreement between Bridgeline Digital, Inc.

and the investors named therein, dated October 29, 2010

November 4, 2010

Securities Purchase Agreement between Bridgeline Digital, Inc.

and the investors named therein, dated May 31, 2012

Form of Common Stock Purchase Warrant issued to Placement Agent, dated November 6, 2013

November 12, 2013

Placement Agent Agreement between Bridgeline Digital, Inc.

and Taglich Brothers, Inc., dated October 30, 2013

November 12, 2013

Form of Restricted Stock Agreement by and between Bridgeline Digital, Inc.

and certain Board of Directors, dated February 24, 2014

Securities Purchase Agreement between Bridgeline Digital, Inc.

and the Investors named therein dated March 28, 2014

Form of Common Stock Purchase Warrant issued to Placement Agent, dated March 28, 2014

Securities Purchase Agreement between Bridgeline Digital, Inc and the investors therein, dated October 28, 2014

November 4, 2014

Incorporated by Reference

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January 9, 2015

Side Letter between the Company and Michael Taglich, dated January 7, 2015

January 9, 2015

Form of Common Stock Purchase Warrant Issued by Company to Michael Taglich dated February 17, 2015

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July 24, 2015

Securities Purchase Agreement between Bridgeline Digital, Inc and the investors therein, dated October 13, 2015

February 12, 2016

Bridgeline Digital Inc.

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Form of Common Stock Purchase Warrant issued to Placement Agent

Loan and Security Agreement between Bridgeline Digital Inc.

and Heritage Bank of Commerce, dated June 9, 2016

June 15, 2016

Unconditional Guarantee entered into by Michael N.

Taglich in favor of Heritage Bank of Commerce, dated June 9, 2016

June 15, 2016

Placement Agreement between Bridgeline Digital, Inc and Taglich Brothers, Inc dated March 31, 2016

June 15, 2016

First Amendment to the Loan and Security Agreement between Bridgeline Digital Inc.

and Heritage Bank of Commerce, dated August 15, 2016

August 15, 2016

Form of Securities Purchase Agreement dated November 3, 2016

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November 4, 2016

Second Amendment to the Loan and Security Agreement between Bridgeline Digital Inc.

and Heritage Bank of Commerce, dated December 14, 2016

December 14, 2016

Third Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Heritage Bank of Commerce dated August 10, 2017

August 14, 2017

First Amendment to Affirmation of Guaranty between Michael N.

Taglich and Heritage Bank of Commerce

August 14, 2017

Loan and Security Agreement between Bridgeline Digital, Inc and Montage Capital II, L.P.

3 unchanged sentences

October 13, 2017

Intercreditor Agreement between Heritage Bank of Commerce and Montage Capital II, L.P dated October 10, 2017

Intercreditor Agreement between Heritage Bank of Comerce and Montage Capital II, L.P dated October 10, 2017

October 13, 2017

Fifth Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Heritage Bank of Commerce, dated November 27, 2017

November 28, 2017

Seventh Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Heritage Bank of Commerce, dated May 10, 2018

First Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Montage Capital II.

LP, dated May 10, 2018

Eight Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Heritage Bank of Commerce, dated August 10, 2018

August 14, 2018

Form of Note Purchase Agreement

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September 11, 2018

Ninth Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Heritage Bank of Commerce, dated September 21, 2018

September 25, 2018

Second Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Montage Capital II, L.P., dated October 22, 2018

Second Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Montge Capital II, L.P., dated October 22, 2018

October 24, 2018

Incorporated by Reference

Tenth Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc and Heritage Bank of Commerce, dated December 27, 2018

December 28, 2018

Subsidiaries of the Registrant

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures