What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-12-19 compared with 2024-12-26 · 70 added, 75 removed, 229 unchanged (39% of the section changed)

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Use of Proceeds From Registered Securities

There were no sales of unregistered or registered equity securities during the fiscal year ended September 30, 2024.

Not applicable.

There were approximately $0.7 million in sales of unregistered equity securities during the fiscal year ended September 30, 2025.

On March 25, 2025, the Company separately entered into a form subscription agreement with certain accredited investors relating to a private placement transaction and sale (the “Private Placement”) of 473,979 unregistered shares of the Company's common stock at an offering price of $1.52 per share, for aggregate gross proceeds from the Private Placement of $720 thousand before deducting related offering expenses.

Proceeds after deducting offering expenses was $700 thousand.

The private placement closed on March 26, 2025.

The offer and sale of the securities were made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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This section should be read in combination with the accompanying audited consolidated financial statements and related notes prepared in accordance with United States generally accepted accounting principles ( “ GAAP ” ).

We are a an AI-powered marketing technology company that offers a suite of products that help companies grow online revenue by driving more visitors to their websites, converting more visitors to purchasers, and increasing average order value per purchaser.

We are an AI-powered marketing technology company that offers a suite of products that help companies grow online revenue by driving more visitors to their websites, converting more visitors to purchasers, and increasing average order value per purchaser.

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

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.

Our product offerings include:

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 premises at the customer’s facility, or manage-hosted by Bridgeline via a cloud-based, dedicated hosted services model.

The product offerings include:

a site search, recommendation, and personalization software application, built for marketers to enhance, normalize, and enrich an online customer's content search and product discovery experience.

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Each of our product offerings goes to market through two main types of partnerships.

The first partner category includes platforms such as Adobe, BigCommerce, Optimizely, Sitefinity, Shopify and others.

The first partner category includes platforms such as Adobe, BigCommerce, Optimizely, Sitefinity, Shopify, Unilog and others.

Our software often embeds directly into these platforms through connectors and SDK solutions that we develop in concert with each platform.

The second category includes web-development agencies which typically have deep relationships with end-customers and have the technical expertise to implement our software solutions according to client needs, platform requirements, and industry standards.

Goodwill and Intangible Asset Impairment

There were no goodwill impairment charges recognized during the year ended September 30, 2024.

During the year ended September 30, 2023, we recognized a goodwill impairment charge of $7.5 million.

We continue to evaluate expanding the distribution of our suite of products and interactive development capabilities through acquisitions.

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Summary of Results of Operations

Total revenue for the fiscal year ended September 30, 2024 (“fiscal 2024”) decreased to $15.4 million from $15.9 million for the fiscal year ended September 30, 2023 (“fiscal 2023”).

Total revenue for the fiscal year ended September 30, 2025 (“fiscal 2025”) remained consistent at $15.4 million when compared to fiscal year ended September 30, 2024 (“fiscal 2024”).

The loss from operations for fiscal 2025 was $(2.4) million, compared with a loss from operations of $(2.0) million for fiscal 2024.

We had a net loss for fiscal 2024 of $(2.0) million, which included a gain of approximately $0.1 million as a result of the change in fair value of certain warrant liabilities, compared with a net loss of $(9.4) million, which included a gain 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 20 23.

We had a net loss for fiscal 2025 of $(2.5) million, which included a loss of approximately $4 thousand as a result of the change in fair value of certain warrant liabilities, compared with a net loss of $(2.0) million, which included a gain of approximately $0.1 million as a result of the change in fair value of certain warrant liabilities, in fiscal 2024 .

Basic and diluted net loss per share attributable to common stockholders for fiscal 2025 was $ (0.25) compared with the equivalent basic and diluted net loss per share attributable to common stockholders of $ (0.19) for fiscal 2024 .

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Year Ended September 30,

Subscription and perpetual licenses

Digital engagement services

Total net revenue

Cost of revenue

Subscription and perpetual licenses

Digital engagement services

Total cost of revenue

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Depreciation and amortization

Goodwill impairment

Restructuring and acquisition related expenses

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Provision for benefit from income taxes

Redemption of Series C Convertible Preferred Stock

Net loss attributable to common shareholders

Non-GAAP Measure:

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Our revenue is derived from two sources:

(i) Subscription and Perpetual licenses and (ii) Digital Engagement Services.

Subscription and Perpetual Licenses

Revenue from Subscription and perpetual licenses of $12.1 million in fiscal 2024 decreased $(0.6) million, or (5)%, from $12.7 million in fiscal 2023.

The decrease compared to the prior period included a reduction in revenue from a particular customer.

Subscription and perpetual license revenue as a percentage of total revenue decreased to 79% in fiscal 2024 from 80% in fiscal 2023.

Digital Engagement Services

Digital engagement services revenue is comprised of implementation and retainer-related services.

Total revenue from digital engagement services of $3.2 million in fiscal 2024 increased 3% from $3.1 million in fiscal 2023.

Digital engagement services revenue as a percentage of total revenue increased to 21% in fiscal 2024 from 20% in fiscal 2023.

(i) Subscription and (ii) Services.

Subscription revenue of $12.4 million in fiscal 2025 increased $0.2 million, or 2%, from $12.1 million in fiscal 2024.

Subscription revenue as a percentage of total revenue increased to 80% in fiscal 2025 from 79% in fiscal 2024.

Services revenue is comprised of implementation and retainer-related services.

Total revenue from services of $3.0 million in fiscal 2025 decreased (6)% from $3.2 million in fiscal 2024.

Services revenue as a percentage of total revenue decreased to 20% in fiscal 2025 from 21% in fiscal 2024.

Bridgeline’s Core products, led by HawkSearch, grew by 16% to $8.9 million in fiscal 2025 (representing 58% of total revenue) from $7.7 million in fiscal 2024 (representing 50% of total revenue).

Bridgeline revenue was flat in fiscal 2025 compared to fiscal 2024, with growth in Core products, led by HawkSearch, offset by lower revenue in certain legacy products.

Cost of Revenue

Total cost of revenue for fiscal 2024 of $4.9 million decreased $(0.1) million, or (2)% compared to the prior period.

Cost of Subscription and Perpetual License

Cost of subscription and perpetual licenses of $3.4 million in fiscal 2024 increased slightly from fiscal 2023.

The increase in cost of subscription and perpetual licenses in fiscal 2024 compared to fiscal 2023 is primarily due to higher costs to operate our cloud-based hosting model with Amazon Web Services, offset by a decrease in personnel costs.

The cost of subscription and perpetual licenses as a percentage of subscription and perpetual license revenue increased to 28% in fiscal 2024 from 26% in fiscal 2023.

This increase is primarily due to the overall decrease in subscription and perpetual license revenue.

Cost of Digital Engagement Services

Cost of digital engagement services of $1.5 million in fiscal 2024 decreased (7)%, from $1.7 million in fiscal 2023.

The cost of total digital engagement services as a percentage of total digital engagement services revenue decreased to 48% in fiscal 2024 from 52% in fiscal 2023.

These decreases are primarily due to the overall decrease in personnel costs.

Total cost of revenue for fiscal 2025 of $5.1 million increased $0.2 million, or 4% compared to the prior period.

Cost of Subscription Revenue

Cost of subscription revenue of $3.7 million in fiscal 2025 increased $0.3 million, or 8%, from $3.4 million in fiscal 2024.

The increase in cost of subscription revenue in fiscal 2025 compared to fiscal 2024 is primarily due to higher costs to operate our cloud-based hosting model with Amazon Web Services, offset by a decrease in personnel costs.

The cost of subscription revenue as a percentage of subscription revenue increased to 30% in fiscal 2025 from 28% in fiscal 2024.

Cost of Services Revenue

Cost of services revenue of $1.5 million in fiscal 2025 and 2024 remained consistent.

The cost of total services revenue as a percentage of total services revenue increased slightly to 49% in fiscal 2025 from 48% in fiscal 2024.

This increase is primarily due to the overall increase in personnel costs relative to total subscription revenue.

Gross profit of $10.2 million decreased $(0.2) million, or (2)%, in fiscal 2025 compared to $10.4 million for fiscal 2024.

The gross profit margin remained consistent at 68% for fiscal 2024 and 2023.

The gross profit margin was 67% and 68% for fiscal 2025 and 2024, respectively.

Operating Expenses

Sales and Marketing Expenses

Sales and marketing expenses of $3.7 million in fiscal 2024 decreased $(1.0) million, or (22)%, from $4.8 million in fiscal 2023.

Sales and marketing expense as a percentage of total revenue decreased to 24% in fiscal 2024 compared to 30% in fiscal 2023.

The decrease compared to the prior period is primarily attributable to lower personnel costs and lower marketing spend on leads and conferences.

Sales and marketing expenses of $4.5 million in fiscal 2025 increased $0.8 million, or 20%, from $3.7 million in fiscal 2024.

Sales and marketing expense as a percentage of total revenue increased to 29% in fiscal 2025 compared to 24% in fiscal 2024.

The increase compared to the prior period is primarily attributable to higher marketing spend on leads and conferences, partially offset by lower personnel costs.

General and Administrative Expenses

General and administrative expenses of $3.3 million in fiscal 2024 increased $0.1 million, or 3%, from $3.2 million in fiscal 2023.

General and administrative expenses of $3.1 million in fiscal 2025 decreased $(0.1) million, or (4)%, from $3.3 million in fiscal 2024.

General and administrative expense as a percentage of revenue was 20% in fiscal 2025 compared to 21% in fiscal 2024.

These increases compared to the prior period are primarily attributable to higher personnel costs.

The decrease compared to the prior period is primarily attributable to lower personnel costs.

Research and Development

Research and development expense of $4.2 million in fiscal 2024 increased $0.5 million, or 13%, from $3.7 million in fiscal 2023.

Research and development expense as a percentage of total revenue increased to 27% in fiscal 2024 compared to 23% for fiscal 2023.

These increases compared to the prior period are primarily attributable to higher personnel costs.

Research and development expense of $4.0 million in fiscal 2025 decreased $(0.1) million, or (3)%, from $4.2 million in fiscal 2024.

Research and development expense as a percentage of total revenue decreased to 26% in fiscal 2025 compared to 27% for fiscal 2024.

These decreases compared to the prior period are primarily attributable to lower personnel costs.

Depreciation and Amortization

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The decrease was due to intangible assets that became fully amortized.

Goodwill Impairment

During the year ended September 30, 2023, the Company recognized a goodwill impairment charge of $7.5 million.

During the year ended September 30, 2024, there were no goodwill impairment charges recognized.

Restructuring and Acquisition Related Expenses

Restructuring and acquisition related expenses was $0.2 million in fiscal 2024.

During fiscal 2024, expenses incurred were related to severance and merger and acquisition costs, and during fiscal 2023, expenses incurred were related to further acquisition integrations.

Restructuring and acquisition related expenses of $0.2 million in fiscal 2025 remained consistent with 2024.

During fiscal 2025 and 2024, expenses incurred were related to severance and merger and acquisition costs.

Loss from Operations

The loss from operations was $(2.0) million for fiscal 2024 compared to a loss from operations of $(9.9) million for fiscal 2023, a decrease of $(7.9) million or (80)%.

The decrease is primarily due to the goodwill impairment in fiscal 2023.

The loss from operations was $(2.4) million for fiscal 2025 compared to a loss from operations of $(2.0) million for fiscal 2024, an increase of $0.4 million or 20%.

Interest expense and other, net

Interest expense and other, net, was $(0.1) million of income in fiscal 2024, which primarily consisted of non-recurring non-operating costs, compared to $(0.2) million of income in fiscal 2023, which primarily consisted of non-recurring operating costs.

Interest expense and other, net, was $(0.1) million of income in fiscal 2025 and 2024, which primarily consisted of non-recurring, non-operating costs.

Change in fair value of warrant liabilities

The Company recognized a gain related to the change in fair value of warrant liabilities of $0.1 million for fiscal 2024, and a gain related to the change in fair value of warrant liabilities of $0.6 million for fiscal 2023.

The Company recognized a loss related to the change in fair value of warrant liabilities of $4 thousand for fiscal 2025, and a gain related to the change in fair value of warrant liabilities of $0.1 million for fiscal 2024.

Provision for Income Taxes

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The remaining federal NOL carryforward of $8.4 million is indefinite.

Net operating losses incurred after December 31, 2017 carry forward indefinitely.

Net operating losses for taxable years beginning 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.

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Depreciation and other amortization

Goodwill impairment

Restructuring and acquisition related charges

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Operating Activities

Cash used in operating activities was $(0.8) million during fiscal 2024 compared to cash provided by operating activities of $0.3 million during fiscal 2023.

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, amortization of intangible assets, and goodwill impairment, and changes to accounts receivable, accounts payable and accrued liabilities, as well as deferred revenue.

Cash used in operating activities was $(1.1) million during fiscal 2025 compared to $(0.8) million during fiscal 2024.

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 amortization of intangible assets, and changes to accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, as well as deferred revenue.

Investing Activities

Cash used in investing activities was $(29) thousand during fiscal 2024 compared to cash used in investing activities of $(25) thousand during fiscal 2023.

Cash used in investing activities was $(18) thousand during fiscal 2025 compared to $(29) thousand during fiscal 2024.

Cash used in investing activities during fiscal 2025 and 2024was related primarily to purchases of property and equipment.

Financing Activities

Cash used in financing activities was $(0.2) million during fiscal 2024 compared with $(0.6) million during fiscal 2023.

Cash used in financing activities during both fiscal 2024 and fiscal 2023 was primarily related to payments of long-term debt, and in fiscal 2023, deferred purchase price and contingent consideration payments related to acquisitions completed during fiscal 2021.

Cash provided by financing activities was $1.4 million during fiscal 2025 compared with cash used in financing activities of $(0.2) million during fiscal 2024.

Cash provided by financing activities during fiscal 2025 was primarily related to proceeds from the issuance of common stock, less cash used for the redemption of Preferred Series C shares and used for payment of long-term debt, and in fiscal 2024, payments of long-term debt was primarily used in financing activities.

Capital Resources and Liquidity Outlook

We have historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products.

We believe that future revenues and cash flows will supplement our working capital and that we have an appropriate cost structure to support future revenue growth.

We may offer and sell, from time to time, in one or more offerings, up to $50 million of our debt or equity securities, or any combination thereof.

Such securities offerings may be made pursuant to our currently effective registration statement on Form S-3 (File No.

333-262764), which was initially filed with the Securities and Exchange Commission on February 16, 2022 and declared effective on March 4, 2022 (the “Shelf Registration Statement”).

A complete description of the types of securities that we may sell is described in the Preliminary Prospectus contained in the Shelf Registration Statement.

As of the date of the filing of this Annual Report, there are no active offerings for the sale or obligations to purchase any of our securities pursuant to the Shelf Registration Statement.

There can be no assurances that we will offer any securities for sale or that if we do offer any securities that we will be successful in selling any portion of the securities offered on a timely basis if at all, or on terms acceptable to us.

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 is continuing to maintain tight control over discretionary spending for the 2026 fiscal year.

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.

The Company may offer and sell, from time to time, in one or more offerings, up to $50 million of its debt or equity securities, or any combination thereof.

Such securities offerings may be made pursuant to the Company’s currently effective registration statement on Form S-3 (File No.

333-285176), which was initially filed with the Securities and Exchange Commission on February 24, 2025 and declared effective on February 27, 2025 (the “Shelf Registration Statement”).

A complete description of the types of securities that the Company may sell is described in the Preliminary Prospectus contained in the Shelf Registration Statement.

As of the date of the filing of this Annual Report, there are no active offerings for the sale or obligations to purchase any of the Company’s securities pursuant to the Shelf Registration Statement.

There can be no assurances that the Company will offer any securities for sale or that if the Company does offer any securities that it will be successful in selling any portion of the securities offered on a timely basis if at all, or on terms acceptable to us.

Further, our ability to offer or sell such securities may be limited by rules of the NASDAQ Capital Market.

On March 24, 2025, the Company entered into a Securities Purchase Agreement with purchasers, pursuant to which the Company agreed to issue and sell, in a registered direct offering, an aggregate of 1,000,000 shares of the Company’s common stock, par value $0.001 per share, at an offering price of $1.50 per share, for aggregate gross proceeds from the offering of approximately $1.5 million before deducting the placement agent fee and related offering expenses (see Note 12).

Proceeds after deducting offering expenses was $1.3 million.

On March 25, 2025, the Company separately entered into a form of subscription agreement with certain accredited investors relating to a private placement transaction and sale (the “Private Placement”) of 473,979 unregistered shares of the Company’s common stock at an offering price of $1.52 per share, for aggregate gross proceeds from the Private Placement of approximately $720 thousand before deducting related offering expenses.

Proceeds after deducting offering expenses was $700 thousand.

Off-Balance Sheet Arrangements

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Contractual Obligations

We lease all of our office space locations.

The gross obligations for operating leases and subleases is

$0.2 million of which $0.2 million is expected to be paid in the next twelve months.

We lease all our office space locations.

The gross obligations for operating leases and subleases are

$0.1 million, with obligations extending through January 2028 .

Debt payments on our various debt obligations total

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We derive our 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.

(i) Subscription, which are comprised of software subscription fees (“SaaS”), hosting and related services, maintenance for post-customer support (“PCS”) on perpetual licenses, and perpetual software licenses, and (ii) Services, which are professional services to implement our products such as web development, digital strategy, information architecture and usability engineering search.

Customers who license the software on a subscription basis, which can be described as “Software as a Service” or “SaaS”, do not take possession of the software.

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If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, we include an estimate of the amount we expect to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.

Our subscription service arrangements are non-cancelable and do not contain refund-type provisions.

Our subscription arrangements are non-cancelable and do not contain refund-type provisions.

Revenue is reported net of applicable sales and use tax.

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Payment terms may vary by customer but generally do not exceed 45 days from invoice date.

Invoicing for digital engagement services are either monthly or upon achievement of milestones and payment terms for such billings are within the standard terms described above.

Invoicing for services are either monthly or upon achievement of milestones and payment terms for such billings are within the standard terms described above.

Invoices for subscriptions and hosting are typically issued monthly and are generally due in the month of service.

Our subscription and hosting agreements provide for refunds when service is interrupted for an extended period of time and are reserved for in the month in which they occur, if necessary.

Our digital engagement services agreements with customers do not provide for any refunds for services or products and therefore no specific reserve for such is maintained.

Our services agreements with customers do not provide for any refunds for services or products and therefore no specific reserve for such is maintained.

In the infrequent instances where customers raise a concern over delivered products or services, we have endeavored to remedy the concern and all costs related to such matters have been insignificant in all periods presented.

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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 5. Market for Registrant’s Common Equity