As
filed with the Securities and Exchange Commission on October
12, 2018
Registration
No. 333-227430
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM S-1/A
(Amendment No. 2)
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BRIDGELINE DIGITAL, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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7372
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52-2263942
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(State
or Other Jurisdiction of
Incorporation
or Organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
Number)
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80 Blanchard Road
Burlington, MA 01803
(781)
376-5555
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive
Offices)
Roger Kahn
President and Chief Executive Officer
Bridgeline Digital, Inc.
80 Blanchard Road
Burlington, MA 01803
(781)
376-5555
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to
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Daniel W. Rumsey, Esq.
Jessica R. Sudweeks, Esq.
Disclosure Law Group, a Professional Corporation
600 West Broadway, Suite 700
San Diego, CA 92101
Telephone: (619) 272-7050
Facsimile: (619)
330-2101
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Leslie
Marlow, Esq.
Hank
Gracin, Esq.
Patrick
J. Egan, Esq.
Gracin
& Marlow, LLP
The
Chrysler Building
405
Lexington Avenue, 26th Floor
New
York, NY 10174
Telephone:
(212) 907-6457
Facsimile:
(212) 208-4657
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Approximate date of
commencement of proposed sale to the public: As soon as practicable after this registration
statement becomes effective.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the following
box. ☑
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act:
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Large accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller reporting company
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☑
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Emerging growth
company
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☐
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If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
CALCULATION OF REGISTRATION
FEE
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Title
of Each Class of Securities to be
Registered
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Proposed
Maximum
Aggregate
Offering
Price (1)(2)
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Amount
of
Registration
Fee (3)
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Class A Units
consisting of: (4)
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$7,187,500
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$871.13
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(i)
Common Stock, par value $0.001 per share
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(ii) Warrants
to purchase Common Stock (5)
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Class B Units
consisting of: (4)
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$7,187,500
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$871.13
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(i)
Series B Convertible Preferred Stock, par value $0.001 per
share
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(ii) Warrants
to purchase Common Stock (5)
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(iii) Common Stock
issuable upon conversion of the Series B Convertible Preferred
Stock (5)
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Common Stock
issuable upon exercise of warrants (6)
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$17,968,750
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$2,177.82
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Representative’s
Warrants (5)
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-
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-
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Common Stock
underlying Representative’s Warrants (7)
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$390,625
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$47.34
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Total
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$32,734,375
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3,967.42
(8)
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(1)
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Estimated solely
for the purpose of calculating the amount of the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933, as amended
(the “Securities
Act”). Includes securities that the underwriters have
the option to purchase to cover over-allotments, if
any.
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(2)
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Pursuant to Rule
416 under the Securities Act, the securities being registered
hereunder also include such indeterminate number of additional
securities as may be issued after the date hereof as a result of
stock splits, stock dividends or similar
transactions.
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(3)
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Calculated under
Section 6(b) of the Securities Act as 0.00012120 of the proposed
maximum aggregate offering price.
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(4)
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The proposed
maximum offering price of the Class A Units proposed to be sold in
the offering will be reduced on a dollar-for-dollar basis on the
offering price of any Class B Units offered and sold in the
offering, and as such the proposed aggregate maximum offering price
of the Class A Units and Class B Units if any, is
$7,187,500.
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(5)
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No additional
registration fee is payable pursuant to Rule 457(i) under the
Securities Act.
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(6)
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The warrants issued
with the Class A Units and Class B Units are exercisable at a per
share exercise price equal to 125% of the public offering price of
one share of common stock. The proposed maximum aggregate public
offering price of the shares of common stock issuable upon exercise
of these warrants was calculated to be $17,968,750, which is equal
to 125% of $14,375,000.
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(7)
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Estimated solely
for the purpose of calculating the registration fee pursuant to
Rule 457(g) under the Securities Act.
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(8)
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A
filing fee of $918.47 was previously paid.
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The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933, as amended, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
The information in
this preliminary prospectus is not complete and may be changed.
These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective.
This preliminary prospectus is not an offer to sell these
securities nor does it seek an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
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PRELIMINARY PROSPECTUS
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SUBJECT TO COMPLETION
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DATED OCTOBER 12, 2018
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Up
to 7,530,120 Class A Units Consisting of Common Stock and
Warrants
Up to 6,250
Class B Units Consisting of Series B Convertible Preferred
Stock and Warrants
Up to 7,530,120
Shares of Common Stock Underlying the Series B Convertible
Preferred Stock and
7,530,120 Shares
of Common Stock Underlying
Warrants
Bridgeline
Digital, Inc.
We
are offering up to 7,530,120 Class A Units for an assumed public
offering price of $0.83 price per Class A Unit (the last reported
sale price of our common stock on the Nasdaq Capital Market on
October 11, 2018), each Class A Unit consisting of one share of our
common stock and one warrant to purchase one share of our common
stock at an exercise price equal to 125% of the public offering
price of the Class A Units, which warrants will be exercisable upon
issuance and will expire five years from the date of issuance. The
shares of common stock and warrants that are part of a Class A Unit
are immediately separable and will be issued separately in this
offering. We are also offering the shares of common stock issuable
upon exercise of warrants sold in Class A
Units.
We are also offering to those purchasers, if any,
whose purchase of Class A Units in this offering would otherwise
result in the purchaser, together with its affiliates and certain
related parties, beneficially owning more than 4.99% of our
outstanding common stock immediately following the consummation of
this offering, the opportunity, in lieu of purchasing Class A
Units, to purchase Class B Units. Each Class B Unit will consist of
one share of our newly designated Series B Convertible Preferred
Stock (“Series B
Preferred”) with a stated
value of $1,000 per share and convertible into shares of our common
stock at a conversion price equal to the public offering price of
the Class A Units, together with the equivalent number of warrants
as would have been issued to such purchaser if they had purchased
Class A Units, rather than Class B Units, based on the public
offering price of Class B Units purchased. For each Class B Unit we
sell, the number of Class A Units we are offering will be decreased
on a dollar-for-dollar basis. Because we will issue a common stock
purchase warrant as part of each Class A Unit or Class B Unit, the
number of warrants sold in this offering will not change as a
result of a change in the mix of the Class A Units and Class B
Units sold. The shares of Series B Preferred and warrants that are
part of a Class B Unit are immediately separable and will be issued
separately in this offering. We are also offering the shares of
common stock issuable upon exercise of the warrants sold in Class B
Units and conversion of the Series B
Preferred.
The
number of shares of our common stock outstanding after this
offering will fluctuate depending on how many Class B Units are
sold in this offering and whether and to what extent holders of
shares of Series B Preferred elect to convert such shares into
common stock.
Our common stock is
currently listed on the Nasdaq Capital Market under the symbol
“BLIN.” The last reported sale price of our common
stock on October 11, 2018 was $0.83 per
share.
The
final public offering price per Class A Unit will be determined
through negotiation between us, the underwriter and investors based
on market conditions at the time of pricing, and such final
offering price may be at a discount to the current market price of
our common stock. Therefore, the recent market price used
throughout this prospectus may not be indicative of the final
public offering price per Class A Unit. The public offering price
of the Class B Units will be $1,000 per unit. There is no
established trading market for the warrants or the Series B
Preferred and we do not expect a market to develop. In addition, we
do not intend to apply for the listing of the warrants or the
Series B Preferred on the Nasdaq Capital Market or any other
national securities exchange or other trading market. Without an
active trading market, the liquidity of the warrants and the Series
B Preferred will be limited.
Assuming
a public offering price of $0.83 per Class A Unit (which was the
last reported sale price of our common stock on the Nasdaq Capital
Market on October 11, 2018), the Series B Preferred included in the
Class B Units will be convertible into an aggregate total of
7,530,120 shares of common stock and the warrants included in the
Class B Units will be exercisable for an aggregate total of
7,530,120 shares of common stock.
Investing in our securities involves risks. See
“Risk
Factors” beginning on
page 8 of this prospectus for a discussion of the risks
that you should consider in connection with an investment in our
securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Per
Class A Unit
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Per Class B
Unit
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Total
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Public
offering price
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$
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$
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$
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Underwriting discounts and commissions
(1)
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$
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$
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$
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Proceeds,
before expenses, to us
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$
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$
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$
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_______________
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(1)
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We have also agreed to issue to the representative of
the underwriters a five-year warrant to purchase up to
376,506 shares of our common stock (based on an
assumed public offering price of $0.83 per share,
which was the last reported sale price of our common stock on the
Nasdaq Capital Market on October 11, 2018), an amount
equal to 5% of the aggregate number of shares of our common
stock sold as part of the Class A Units and shares of our common
stock into which the shares of Series B Preferred sold as part of
the Class B Units are convertible, with an exercise price
equal to the greater of (i) 125% of the public offering price per
Class A Unit in this offering and (ii) the closing
price of our common stock on the closing date of this offering, as
reported by the Nasdaq Capital Market (the “Representative's
Warrants”). In
addition, we have also agreed to reimburse the underwriters for
certain expenses. See “Underwriting”
beginning on page 38 for additional information regarding this
warrant and underwriting compensation
generally.
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The underwriters expect to deliver the
securities to purchasers on or
about , 2018, subject to customary
closing conditions.
ThinkEquity
a
division of Fordham Financial Management, Inc.
The
date of this prospectus is
,
2018
BRIDGELINE DIGITAL, INC.
TABLE OF CONTENTS
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43
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43
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44
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ABOUT THIS PROSPECTUS
We have not, and the underwriters have not,
authorized anyone to provide you with information different than
that which is contained in or incorporated by reference in this
prospectus or in any free writing prospectus that we have
authorized for use in connection with this offering. We are
offering to sell, and seeking offers to buy, the securities
covered hereby only in jurisdictions where offers and sales
are permitted. The distribution of this prospectus and the offering
of the securities in certain jurisdictions may be restricted by
law. This prospectus does not constitute, and may not be used in
connection with, an offer to sell, or a solicitation of an offer to
buy, any securities offered by this prospectus by any person in any
jurisdiction in which it is unlawful for such person to make such
an offer or solicitation. You should assume that the information
appearing in this prospectus, the documents incorporated by
reference in this prospectus, and in any free writing prospectus
that we have authorized for use in connection with this offering,
is accurate only as of the date of those respective documents. Our
business, financial condition, results of operations and prospects
may have changed since those dates. You should read this
prospectus, the documents incorporated by reference in this
prospectus, and any free writing prospectus that we have authorized
for use in connection with this offering, in their entirety before
making an investment decision. You should also read and consider
the information in the documents to which we have referred you in
the sections of this prospectus entitled “Where You Can Find More
Information” and
“Incorporation of Certain
Information by Reference.”
For
investors outside of the United States: No action is being taken in
any jurisdiction outside of the United States that would permit a
public offering of the securities or possession or
distribution of this prospectus in any such jurisdiction. Persons
outside of the United States who come into possession of this
prospectus must inform themselves about, and observe any
restrictions relating to, the offering of the
securities and the distribution of this prospectus
outside of the United States.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in this prospectus were
made solely for the benefit of the parties to such agreement,
including, in some cases, for the purpose of allocating risk among
the parties to such agreements, and should not be deemed to be a
representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of
the date when made. Accordingly, such representations, warranties
and covenants should not be relied on as accurately representing
the current state of our affairs.
Unless the context requires otherwise, references
in this prospectus to “Bridgeline,” “Bridgeline
Digital,” the
“Company,” “we,” “us,” and “our” refer to Bridgeline Digital, Inc., a
Delaware corporation.
This prospectus and
the information incorporated herein by reference include
trademarks, servicemarks and tradenames owned by us or other
companies. All trademarks, servicemarks and tradenames included or
incorporated by reference in this prospectus are the property of
their respective owners.
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PROSPECTUS SUMMARY
This summary highlights
information contained elsewhere in this prospectus. This summary
does not contain all of the information you should consider before
investing in our securities. Before deciding to invest in our
securities, you should read this entire prospectus carefully,
including the section of this prospectus entitled “Risk
Factors” beginning on page 8. All brand names or trademarks
appearing in this report are the property of their respective
holders. Unless the context requires otherwise, references in this
report to “Bridgeline,” the “Company,”
“we,” “us,” and “our” refer to
Bridgeline Digital, Inc., a Delaware
corporation.
Overview
Bridgeline
Digital, The Digital Engagement Company™, helps
customers maximize the performance of their full digital experience
from websites and intranets to online stores. Bridgeline’s
Unbound platform integrates Web Content Management, eCommerce,
eMarketing, Social Media management, and Web Analytics (Insights)
with the goal of assisting marketers deliver digital experiences
that attract, engage and convert their customers across all
channels. Bridgeline’s Unbound platform combined with its
digital services assists customers in maximizing on-line revenue,
improving customer service and loyalty, enhancing employee
knowledge, and reducing operational costs. Our Unbound
franchise product is a platform that empowers large franchise and
multi-unit organizations with state-of-the-art web engagement
management while providing superior oversight of corporate
branding. Our Unbound franchise product also deeply integrates
content management, eCommerce, eMarketing and web analytics on one
unified platform.
The Unbound platform is delivered through a
cloud-based software as a service (“SaaS”) multi-tenant business model, whose
flexible architecture provides customers with state of the art
deployment providing maintenance, daily technical operation and
support; or via a traditional perpetual licensing business model,
in which the software resides on a dedicated server in either the
customer’s facility or hosted by Bridgeline via a cloud-based
hosted services model.
The Bridgeline
Unbound Platform is an award-winning application recognized around
the globe. Our teams of Microsoft Gold© certified developers
have won over 100 industry related awards. In 2017, our
Marketing Automation platform was named a 2017 SIIA CODiE Award
finalist in the Best Marketing Solution category. In 2016,
CIO Review selected
Bridgeline Unbound (formerly iAPPS) as one of the 20 Most Promising
Digital Marketing Solution Providers. This followed accolades
from the SIIA (Software and Information Industry Association) which
recognized Content Manager with the 2015 SIIA CODiE Award for Best
Web Content Management Platform. Also in 2015, EContent magazine named
Bridgeline’s Unbound Digital Engagement Platform to its
Trendsetting Products list. The list of 75 products and platforms
was compiled by EContent’s editorial staff, and selections
were based on each offering’s uniqueness and importance to
digital publishing, media, and marketing. We were also recognized
in 2015 as a strong performer by Forrester Research, Inc in its
independence report, “The Forrester Wave ™:
Through-Channel Marketing Automation Platforms, Q3 2015.” In
recent years, our Content Manager and Commerce products were
selected as finalists for the 2014, 2013, and 2012 CODiE Awards for
Best Content Management Solution and Best Electronic Commerce
Solution, globally. In 2014 and 2013, Bridgeline Digital won
twenty-five Horizon Interactive Awards for outstanding development
of web applications and websites. Also in 2013, the Web Marketing
Association sponsored Internet Advertising Competition honored
Bridgeline Digital with three awards for customer websites and B2B
Magazine selected Bridgeline Digital as one of the Top Interactive
Technology companies in the United States. KMWorld Magazine Editors selected
Bridgeline Digital as one of the 100 Companies That Matter in
Knowledge Management and also selected Bridgeline’s Unbound
(formerly iAPPS) as a Trend Setting Product in 2013.
Corporate Information
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THE
OFFERING
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The following summary contains general information about this
offering. The summary is not intended to be complete. You should
read the full text and more specific details contained elsewhere in
this prospectus.
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Issuer
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Bridgeline Digital,
Inc.
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Class A Units
Offered by us
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Up to 7,530,120 Class A Units, with
each Class A Unit consisting of one share of our common stock and a
warrant to purchase one share of our common stock at an exercise
price equal to 125% of the per unit public offering price of the
Class A Units. The Class A Units will not be certificated and the
shares of common stock and warrants that are part of such units
will be immediately separable and will be issued separately in this
offering. Assuming no exercise
of the over-allotment option and that we sell all Class A Units
(and no Class B Units) being offered in this offering at an assumed
public offering price of $0.83 per Class A Unit (which was the last
reported sale price of our common stock on the Nasdaq Capital
Market on October 11, 2018), we would issue in this offering an
aggregate of 7,530,120 shares of our common stock and warrants to
purchase 7,530,120 shares of our common stock. The actual offering
price per Class A Unit will be negotiated between us and the
underwriters based on the trading of our common stock prior to the
offering, among other things, and may be at a discount to the
current market price. We are also offering the shares of common
stock issuable upon exercise of warrants sold as part of the Class
A Units.
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Assumed Public Offering
Price per Class A Unit
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$0.83 per Class A Unit |
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Class B Units Offered by
us
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Up
to 6,250 Class B Units. We are also offering to each purchaser
whose purchase of Class A Units in this offering would otherwise
result in the purchaser, together with its affiliates and certain
related parties, beneficially owning more than 4.99% of our
outstanding common stock immediately following the consummation of
this offering, the opportunity to purchase, if the purchaser so
chooses, Class B Units, in lieu of Class A Units. Each
Class B Unit will consist of one share of our Series B Preferred,
with a stated value of $1,000 per share and convertible into shares
of our common stock at conversion price equal to the per unit
public offering price of the Class A Units, together with an
equivalent number of warrants as would have been issued to such
purchaser if they had purchased Class A Units based on the per unit
public offering price of the Class A Units. The Class B Units
will not be certificated and the shares of Series B Preferred and
warrants that are part of such unit will be immediately separable
and will be issued separately in this offering. We are also
offering the shares of common stock issuable upon exercise of
warrants sold in Class B Units and shares issuable upon conversion
of the shares of Series B Preferred sold in each Class B Unit. For
each Class B Unit we sell, the number of Class A Units we are
offering will be decreased on a dollar-for-dollar basis. Because we
will issue a warrant as part of each Class A Unit and Class B Unit
(together, the “Units”), the number of warrants sold in this
offering will not change as a result of a change in the mix of the
Units sold.
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Public Offering Price per Class B
Unit |
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$1,000 per Class B
Unit
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Warrants Offered by
us |
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Each
warrant included in the Units will have an exercise price of 125%
of the per unit public offering price of the Class A Units, will be
exercisable upon issuance and will expire five years from the date
of issuance. Each warrant will be exercisable to purchase one share
of our common stock. No fractional shares of common stock will
be issued in connection with the exercise of a warrant. In lieu of
fractional shares, we will round up to the next whole
share. Pursuant to the terms
of the warrants, in the event of a fundamental transaction, the
Company shall, at the sole option of the holder of the warrants,
purchase the warrants from the holder at a price equal to the Black
Scholes Value (as defined in the warrant) on the date of the
consummation of such fundamental transaction;provided,
however, that if the
fundamental transaction is not within the Company’s control,
the holder shall only be entitled to receive the same type of
consideration that is being offered to holders of the
Company’s common stock.The
warrants also provide that in the event of a fundamental
transaction we are required to cause any successor entity to assume
our obligations under the warrants. In addition, holders of the
warrants will be entitled to receive, upon exercise of the warrant,
the kind and amount of securities, cash or property that the holder
would have received had the holder exercised the warrant
immediately prior to such fundamental transaction. This prospectus
also relates to the offering of the shares of common stock issuable
upon exercise of the warrants.
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Over-allotment
option
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We have
granted a 45-day option to the underwriters to purchase (i) a
maximum of 1,129,518 additional shares of common stock for a price
per share equal to the per unit public offering price of the Class
A Units, less underwriting discounts and expenses (15% of the
shares of common stock included in the Class A Units and the
shares of common stock issuable upon conversion of the Series B
Preferred shares sold as part of the Class B Units, and/or
(ii) warrants to purchase a maximum of 1,129,518 shares of common
stock at an offering price of $0.01 per warrant (15% of the
warrants included as part of the Units sold in this offering),
solely to cover over-allotments, if
any.
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Common
Stock to be Outstanding Immediately after this
Offering
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11,771,375
shares of our common stock (at an assumed offering price of $0.83
per Class A Unit, which was the last reported sale price of our
common stock on the Nasdaq Capital Market on October 11, 2018),
assuming that no Class B Units are sold in this offering and that
none of the warrants offered hereby are exercised. If the
underwriters exercise their over-allotment option in full, the
total number of shares of common stock outstanding immediately
after this offering would be 12,900,893 (at an assumed offering
price of $0.83 per Class A Unit, which was the last reported sale
price of our common stock on the Nasdaq Capital Market on October
11, 2018), assuming that no Class B Units are sold in this offering
and that none of the warrants offered hereby are
exercised.
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Series B
Convertible Preferred Stock
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The shares of Series B
Preferred offered as a part of the Class B Units will be
convertible into shares of our common stock (subject to adjustment as provided in the related
certificate of designation of preferences, rights and
limitations) at any time at the option of the holder, at a
conversion price equal to the per unit public offering price of the
Class A Units. See “Description of Securities We Are
Offering” for a discussion of the terms of the Series
B Preferred.
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Use of
Proceeds
|
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We estimate
that we will receive net proceeds from this offering of
approximately $4.6 million, or approximately $5.4
million if the underwriters exercise their over-allotment
option in full, in each case, after deducting underwriting
discounts and commissions, our estimated offering
expenses and amounts necessary to repay certain term
notes.
We
currently intend to use a portion of the net proceeds that we
receive from this offering to repay certain term notes, and to
utilize the remaining net proceeds for research and development,
working capital needs, capital expenditures and other general
corporate purposes. In addition, we may use a portion of the net
proceeds from this offering to pursue potential strategic
acquisitions, although we do not have any specific plans or
arrangements to do so at this time. See “Use of
Proceeds” on page
17 of this
prospectus.
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Risk
Factors
|
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Investing in our securities involves significant
risks. Before making a decision whether to invest in our
securities, please read the information contained in or
incorporated by reference under the heading
“Risk
Factors” in this
prospectus, the documents we have incorporated by reference herein,
and under similar headings in other documents filed after the date
hereof and incorporated by reference into this prospectus. See
“Incorporation of Certain
Information by Reference”
and “Where You Can Find More
Information.”
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Nasdaq Capital
Market Symbol
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“BLIN.”
There is no established
public trading market for the warrants or shares of Series B
Preferred offered herein, and we do not expect an active trading
market to develop. We do not intend to list the warrants or
Series B Preferred on the Nasdaq Capital Market or any other
securities exchange or other trading market. Without an
active trading market, the liquidity of the warrants and the Series
B Preferred will be limited.
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●
459,846
shares of our common stock issuable upon the exercise of
outstanding stock options outstanding at a
weighted-average exercise price of $6.81 per share;
●
546,151
shares of common stock issuable upon the exercise of warrants at a
weighted-average exercise price of $6.16 per share;
●
260,534
shares of common stock reserved for future issuance under our 2016
Stock Incentive Plan (the “2016 Plan”);
●
161,455 shares of common stock issuable upon
conversion of 262,364 outstanding shares of Series A Convertible
Preferred Stock
(“Series A
Preferred”);
and
●
376,506 shares of common stock issuable upon
the exercise of the Representative’s Warrants to be issued to
the representative of the underwriters upon closing of this
offering.
The
above numbers reflect the 1-for-5 stock split effectuated by us on
July 24, 2017.
Unless
otherwise indicated, all information in this prospectus
assumes:
●
no
conversion of outstanding shares of Series A
Preferred;
●
no shares of
Series B Preferred are sold in this
offering;
●
no
exercise of outstanding warrants or the outstanding stock options
issued under the 2016 Plan, as described above; and
●
no
exercise by the underwriters of their over-allotment
option.
To the
extent we sell any Class B Units in this offering, the
same aggregate number of common stock equivalents resulting from
this offering would be convertible under the Series B Preferred
issued as part of the Class B Units.
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SUMMARY FINANCIAL DATA
The following tables set forth a summary of our
historical financial data as of, and for the periods ended on, the
dates indicated. We have derived the statements of operations data
for the years ended September 30, 2017 and 2016 from our audited
financial statements and the related notes appearing in our Annual
Report on Form 10-K for the year ended September 30, 2017 (the
“2017
10-K”), which is
incorporated by reference into this prospectus. The statements of
operations data for the nine-months ended June 30, 2018 and 2017
and the balance sheet data as of June 30, 2018 have been derived
from our unaudited financial statements appearing in our Quarterly
Report on Form 10-Q for the period ended June 30, 2018 (the
“June
10-Q”), which is
incorporated by reference into this prospectus. In the opinion of
the management, the unaudited data reflects all adjustments,
consisting of normal and recurring adjustments, necessary for a
fair presentation of results as of and for these
periods.
The following summary
financial data should be read together with our consolidated
financial statements and related notes appearing in the 2017 10-K
and in the June 10-Q, as well as in the sections entitled
“Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in each of the
2017 10-K and in our June 10-Q, each of which are incorporated by
reference into this prospectus. Our audited consolidated financial
statements have been prepared in U.S. dollars in accordance with
U.S. generally accepted accounting principles. Our historical results for any prior period are
not indicative of our future results, and our results for the
nine-months ended June 30, 2018 may not be indicative of our
results for the year ending September 30, 2018.
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Statement of Operations
Data:
(dollars in
thousands)
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||
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|
|
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||
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Nine Months Ended
|
Years Ended
|
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||
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|
June 30,
|
September 30,
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2018
|
2017
|
2017
|
2016
|
|
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Revenue
|
(unaudited)
|
|
|
|
|
|
|
Digital
engagement services
|
$5,559
|
$6,298
|
$8,498
|
$8,520
|
|
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|
Subscription
and perpetual licenses
|
4,367
|
5,018
|
6,788
|
6,084
|
|
|
|
Managed
service hosting
|
839
|
743
|
1,007
|
1,291
|
|
|
|
Total revenue
|
10,765
|
12,059
|
16,293
|
15,895
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
Digital
engagement services
|
3,666
|
3,569
|
4,911
|
5,143
|
|
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|
Subscription
and perpetual licenses
|
1,503
|
1,468
|
1,969
|
1,835
|
|
|
|
Managed
service hosting
|
213
|
209
|
280
|
304
|
|
|
|
Total
cost of revenue
|
5,382
|
5,246
|
7,160
|
7,282
|
|
|
|
Gross
profit
|
5,383
|
6,813
|
9,133
|
8,613
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Sales
and marketing
|
3,045
|
3,661
|
4,807
|
4,934
|
|
|
|
General
and administrative
|
2,156
|
2,395
|
3,256
|
3,456
|
|
|
|
Research
and development
|
1,221
|
1,175
|
1,587
|
1,578
|
|
|
|
Depreciation
and amortization
|
305
|
468
|
582
|
1,309
|
|
|
|
Goodwill
impairment
|
4,615
|
-
|
-
|
-
|
|
|
|
Restructuring
expenses
|
187
|
249
|
286
|
879
|
|
|
|
Total operating expenses
|
11,529
|
7,948
|
10,518
|
12,156
|
|
|
|
|
|
|
|
|
|
|
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Loss
from operations
|
(6,146)
|
(1,135)
|
(1,385)
|
(3,543)
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|
|
|
Interest
and other expense, net
|
(115)
|
(122)
|
(201)
|
(914)
|
|
|
|
Loss
on inducement of debt (convertible notes)
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-
|
-
|
-
|
(3,414)
|
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|
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Loss
before income taxes
|
(6,261)
|
(1,257)
|
(1,586)
|
(7,871)
|
|
|
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(Benefit)/provision
for income taxes
|
11
|
13
|
16
|
(47)
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|
Net
loss
|
$(6,272)
|
$(1,270)
|
$(1,602)
|
$(7,824)
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|
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Dividends
on convertible preferred stock
|
(231)
|
(207)
|
(281)
|
(131)
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|
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Net
loss applicable to common shareholders
|
(6,503)
|
(1,477)
|
(1,883)
|
(7,955)
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|
|
|
Net
loss per share attributable to common shareholders:
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|
|
|
|
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Basic
and diluted
|
$(1.54)
|
$(0.36)
|
$(0.45)
|
$(4.20)
|
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Number
of weighted average shares outstanding:
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|
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|
Basic
and diluted
|
4,222,848
|
4,129,481
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4,147,140
|
1,893,003
|
|
|
|
|
|
|
|
|
|
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Consolidated Balance Sheet Data:
|
As of June 30, 2018
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Pro Forma
|
|
(unaudited, dollars in thousands)
|
Actual
|
Pro Forma(1)
|
As Adjusted(2)
|
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Cash
and cash equivalents
|
$427
|
$1,187
|
$ 5,755
|
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Total
assets
|
11,422
|
12,182
|
16,750
|
|
Debt,
current portion, less unamortized discount and issuance
costs
|
198
|
958
|
198
|
|
Debt,
net of current portion
|
2,810
|
2,810
|
2,810
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|
Total
liabilities
|
6,090
|
6,850
|
6,090
|
|
Total
stockholders’ equity
|
5,332
|
5,332
|
10,660
|
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(1)
|
The pro forma figures give effect to the sale by
the Company of certain term promissory notes (the
“Term
Notes”) in the aggregate
principal amount of $941,176, which sales occurred
on September 7, 2018. After recording $141,176 of original
issue discount and debt issuance costs of $40,000, the Company
received net cash proceeds in the aggregate amount of $760,000 for
the Term Notes. The original issue discount and debt issuance costs
are recorded as a contra liability and will be amortized over the
life of the Term Notes. The Term Notes have an original issue
discount of fifteen percent (15%), bear interest at a rate of
twelve percent (12%) per annum, and mature on the earlier to occur
of (i) six months from September 7, 2018, or (ii) the consummation
of a debt or equity financing resulting in gross proceeds to the
Company of at least $3.0 million. In connection with the issuance of the Term Notes,
each purchaser also entered into a Subordination Agreement with the
Company’s lenders, Heritage Bank of Commerce and Montage
Capital II, L.P. (the “Lenders”), pursuant to which the purchasers agreed
to subordinate (i) all of the Company’s indebtedness and
obligations to the purchasers, whether presently existing or
arising in the future, to all of the Company’s indebtedness
to the Lenders, and (ii) all of the purchasers’ security
interests, if any, to all of the Lenders’ security interests
in property of the Company.
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(2)
|
Pro forma as
adjusted balance sheet data reflects the items described in
footnote 1 and our sale of 7,530,120 Class A Units in
this offering at an assumed public offering price of
$0.83 per share, which was the last reported sale
price of our common stock on the Nasdaq Capital Market on October
11, 2018, after deducting underwriting discounts and
commissions and estimated offering expenses payable by
us, as well as the amounts necessary to
repay the Term Notes, including all accrued interest, which
amounted to approximately $10,000 as of October 11,
2018, out of proceeds of this offering. Pro forma as adjusted
balance sheet data is illustrative only and will change based on
the actual public offering price and other terms of this offering
determined at pricing. Each $0.25 increase (decrease) in the
assumed public offering price per Class A
Unit would increase (decrease) the amount of cash and cash
equivalents, working capital, total assets, and total
stockholders’ equity by approximately $1.8 million, assuming
the number of Class A Units offered by us, as set
forth on the cover page of this prospectus, remains the same, and
after deducting underwriting discounts and commissions, estimated
offering expenses payable by us, and the amounts necessary to repay
the Term Notes, including all accrued interest, which amounted to
approximately $10,000 as of October 11, 2018. We may
also increase or decrease the number of Class A Units
to be issued in this offering. Each increase (decrease) of
1.0 million Class A Units offered by us would
increase (decrease) the as adjusted amount of cash and cash
equivalents, working capital, total assets and total
stockholders’ deficit by approximately $771,900,
assuming the assumed public offering price per Class A Unit remains
the same, and after deducting underwriting discounts and
commissions, estimated offering expenses payable by us, and the
amounts necessary to repay the Term Notes, including all accrued
interest, which amounted to approximately $10,000 as of October
11, 2018.
The pro forma
as adjusted basis assumes no sale of Class B Units and excludes the
proceeds, if any, from the exercise of any warrants issued in this
offering. The pro forma information discussed above is
illustrative only and will be adjusted based on the actual public
offering price and other terms of this offering determined between
us and the underwriters at pricing.
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RISK FACTORS
An
investment in our securities involves a high degree of risk. You
should consider the risks, uncertainties and assumptions discussed
below as well as all of the other information contained or
incorporated by reference in this prospectus, including our
Quarterly Reports on Form 10-Q for the quarters ended December 31,
2017, March 31, 2018 and June 30, 2018, and our Annual Report on
Form 10-K for the fiscal year ended September 30, 2017. See
“Incorporation of Certain Information by Reference” and
“Where You Can Find More Information.” It is not possible to predict or identify all such
risks. Consequently, we could also be affected by additional
factors that are not presently known to us or that we currently
consider to be immaterial to our
operations. The occurrence of any
of these known or unknown risks might cause you to lose all or part
of your investment in the offered securities.
Risks Related to Our Business
We have incurred significant net losses since inception and expect
continue to incur operating losses for the foreseeable future. We
may never achieve or sustain profitability, which would depress the
market price of our common stock and could cause you to lose all or
a part of your investment.
We
have incurred net losses in each fiscal year since our inception in
2000, including net losses of $7.8 million and $1.6 million during
the fiscal years ended September 30, 2017 and 2016, respectively,
and net losses of $6.3 million and $1.3 million during the nine
months ended June 30, 2018 and 2017, respectively. As of September
30, 2017, we had an accumulated deficit of approximately $54.3
million. We do not know whether or when we will become profitable.
Substantially all of our operating losses have resulted from costs
incurred in connection with our research and development programs
and from general and administrative costs associated with our
operations. Although we expect to incur decreasing levels of
operating losses over the next several years due to the
implementation of our restructuring plant, no assurances can be
given. Our prior losses, combined with expected future losses, have
had and will continue to have an adverse effect on our
stockholders’ equity (deficit) 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 will become profitable, if at all. Even if we do become
profitable, we may not be able to sustain or increase our
profitability on a quarterly or annual basis.
Our debt obligations and operating lease commitments may adversely
affect our financial condition and cash flows from
operations.
We maintain a $2.5 million line of credit
with our bank, Heritage Bank of Commerce, as well as a
non-revolving term loan for up to $1.0 million through Montage
Capital II, L.P., both of which are secured by all of our assets
and intellectual property. Additionally, on September 7, 2018, we
sold and issued Term Notes in the aggregate principal amount of
$941,176, which had accrued approximately $10,000 in interest as of
October 11, 2018, and which will mature on the
earliest to occur of (i) six months from September 7, 2018,
or (ii) the consummation of a debt or equity financing resulting in
gross proceeds to the Company of at least $3.0 million. Further, we have contractual commitments in
operating lease arrangements, which are not reflected on our
consolidated balance sheets. Our ability to meet our expenses and
debt obligations will depend on our future performance, which will
be affected by financial, business, economic, regulatory and other
factors. We will not be able to control many of these factors, such
as economic conditions and governmental regulations. Further, our
operations may not generate sufficient cash to enable us to service
our debt or contractual obligations resulting from our leases. If
we fail to make a payment on our debt, we could be in default on
such debt. If we are at any time unable to generate sufficient cash
flows from operations to service our indebtedness when payment is
due, we may be required to attempt to renegotiate the terms of the
instruments relating to the indebtedness, seek to refinance all or
a portion of the indebtedness or obtain additional financing. There
can be no assurance that we would be able to successfully
renegotiate such terms, that any such refinancing would be possible
or that any additional financing could be obtained on terms that
are favorable or acceptable to us.
Although
as of June 30, 2018, we were in compliance with all financial
covenants required pursuant to our borrowing facilities, we have
failed to satisfy such covenants in the past. A failure to comply
with the covenants and other provisions of our outstanding debt
could result in events of default under such instruments, which
could permit acceleration of all of our borrowings under our
revolving credit facility as well as our non-revolving term loan.
Any required repayment of our borrowing facilities as a result of a
fundamental change or other acceleration would lower our current
cash on hand such that we would not have those funds available for
use in our business. In addition, in the event we do not have
sufficient cash resources to repay our borrowings when due, we may
be required to forfeit all or some of our assets to the banks as a
result of their security interest in our assets, which would
negatively impact our business, financial condition and future
prospects, and we may not be able to continue as a going
concern.
If we are unable to manage our future growth efficiently, our
business, liquidity, revenues and profitability may
suffer.
We
anticipate that continued expansion of our core business will
require us to address potential market opportunities. For example,
we may need to expand the size of our research and development,
sales, corporate finance or operations staff. There can be no
assurance that our infrastructure will be sufficiently flexible and
adaptable to manage our projected growth or that we will have
sufficient resources, human or otherwise, to sustain such growth.
If we are unable to adequately address these additional demands on
our resources, our profitability and growth might suffer. Also, if
we continue to expand our operations, management might not be
effective in expanding our physical facilities and our systems, and
our procedures or controls might not be adequate to support such
expansion. Our inability to manage our growth could harm our
business and decrease our revenues.
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 currently have a borrowing facility with Heritage
Bank from which we can borrow, and this line is subject to
financial covenants that must be met. It is not certain that all or
part of this line will be available to us in the future. In
addition, we have received a term loan for up to $1.0 million with
Montage Capital II, L.P. We also depend on other sources of
financing and this 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. 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.
Our revenue and quarterly results may fluctuate, which could
adversely affect our stock price.
We
have experienced, and may in the future experience, significant
fluctuations in our quarterly operating results that may be caused
by many factors. These factors include, amongst
others:
|
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●
|
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.
|
The length of our sales cycle can fluctuate significantly 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. This process often requires a
significant commitment of resources both by prospective customers
and us. Given the significant investment and commitment of
resources required in order to implement our software, it may take
several months, or even several quarters, for marketing
opportunities to materialize. If a customer’s decision to
purchase our products is delayed or if the installation of our
products takes longer than originally anticipated, the date on
which we may recognize revenue from these sales would be delayed.
Such delays and fluctuations could cause our revenue to be lower
than expected in a particular period and we may not be able to
adjust our costs quickly enough to offset such lower revenue,
potentially negatively impacting our results of
operations.
We are dependent upon a small number of major customers, and
a failure to renew our licenses with such customers could
reduce our revenue.
During
fiscal year 2017, two of our customers in aggregate accounted for
24% of total sales. Our customers have no obligation to renew
their subscription licenses, and some customers have elected
not to do so, including a number of our large customers in the
recent two fiscal years. Our license renewal rates may decline or
fluctuate as a result of a number of factors, including customer
dissatisfaction with our products and services, our failure to
update our products to maintain their attractiveness in the market,
or constraints or changes in budget priorities faced by our
customers. A decline in license renewal rates could cause our
revenue to decline which would have a material adverse effect on
our operations.
We face intense and growing competition, which could result in
price reductions, reduced operating margins and loss of market
share.
We
operate in a highly competitive marketplace and generally encounter
intense competition to create and maintain demand for our services
and to obtain service contracts. 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 Bridgeline
Unbound platform (Content Manager, Insights, eCommerce, Marketier,
Social) and web development services are competitive and rapidly
changing. Barriers to entry in such markets are relatively low.
With the introduction of new technologies and market entrants, we
expect competition to intensify in the future. Some of our
principal competitors offer their products at a lower price, which
have in the past and may in the future result in pricing pressures.
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
web development/services market is highly fragmented with a large
number of competitors and potential competitors. Our prominent
public company competitors are Big Commerce, Salesforce (Commerce
Cloud), Episerver, Hubspot, Sitecore and Adobe (Experience
Manager). We face competition from customers and potential
customers who develop their own applications internally. We also
face competition from potential competitors that are substantially
larger than we are and who have significantly greater financial,
technical and marketing resources, and established direct and
indirect channels of distribution. As a result, they are able to
devote greater resources to the development, promotion and sale of
their products than we can.
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 amount of shares traded per day in fiscal 2018 was
approximately 405,213 shares, compared to approximately 26,000
shares per day in fiscal 2017, 38,000 shares per day for fiscal
2016 and 3,000 shares per day for fiscal 2015. The average trading
volume of our common stock can be sporadic and may impair the
ability of holders of our common stock to sell their shares at the
time they wish to sell them or at a price that they consider
reasonable. A low trading volume may also reduce the fair
market value of the shares of our common stock. Accordingly, there
can be no assurance that the price of our common stock will reflect
our actual value. There can be no assurance that the daily trading
volume of our common stock will increase or improve either now or
in the future.
The market price of our common stock is volatile, which could
adversely affect your investment in our common stock.
The market price of our common stock is volatile and could
fluctuate significantly for many reasons, including, without
limitation, as a result of the occurrence of those risks discussed
herein, actual or anticipated fluctuations in our operating results
and general economic and industry conditions. During fiscal 2017
and fiscal 2018, the closing price of our common stock as reported
on the Nasdaq Capital Market fluctuated between $2.12 and $4.55,
and between $0.86 and $3.50, respectively. 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. If we fail this requirement, then the Nasdaq Capital
Market 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.
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.
We
develop and sell complex web engagement software, which may
contain undetected errors or bugs. Such errors can be detected at
any point in a product’s life cycle, but are frequently found
after introduction of new software or enhancements to existing
software. We continually introduce new products and new versions of
our products. Despite internal testing and testing by current and
potential customers, our current and future products may contain
serious defects. If we detect any errors before we ship a product,
we might have to delay product shipment for an extended period of
time while we address the problem. We might not discover software
errors that affect our new or current products or enhancements
until after they are deployed, and we may need to provide
enhancements to correct such errors. Therefore, it is possible
that, despite our testing, errors may occur in our software. These
errors could result in the following:
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harm to our
reputation;
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lost
sales;
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delays
in commercial release;
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product liability
claims;
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contractual
disputes;
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negative
publicity;
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delays in or loss
of market acceptance of our products;
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license
terminations or renegotiations; or
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unexpected expenses
and diversion of resources to remedy errors.
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Furthermore,
our customers may use our software together with products from
other companies. As a result, when problems occur, it might be
difficult to identify the source of the problem. Even when our
software does not cause these problems, the existence of these
errors might cause us to incur significant costs, divert the
attention of our technical personnel from our product development
efforts, impact our reputation, or cause significant customer
relations problems.
Technology and customer requirements evolve rapidly in our
industry, and if we do not continue to develop new products and
enhance our existing products in response to these changes, our
business could suffer.
We
will need to continue to enhance our products in order to
maintain our competitive position. We may not be successful in
developing and marketing enhancements to our products on a timely
basis, and any enhancements we develop may not adequately address
the changing needs of the marketplace. Overlaying the risks
associated with our existing products and enhancements are ongoing
technological developments and rapid changes in customer
requirements. Our future success will depend upon our ability to
develop and introduce in a timely manner new products that take
advantage of technological advances and respond to new customer
requirements. The development of new products is increasingly
complex and uncertain, which increases the risk of delays. We may
not be successful in developing new products and incorporating new
technology on a timely basis, and any new products may not
adequately address the changing needs of the marketplace. Failure
to develop new products and product enhancements that meet market
needs in a timely manner could have a material adverse effect on
our business, financial condition and operating
results.
If we are unable to protect our proprietary technology and other
intellectual property rights, our ability to compete in the
marketplace may be substantially reduced.
If
we are unable to protect our intellectual property, our
competitors could use our intellectual property to market products
similar to our products, which could decrease demand for such
products, thus decreasing our revenue. We rely on a combination of
copyright, trademark and trade secret laws, as well as licensing
agreements, third-party non-disclosure agreements and other
contractual measures to protect our intellectual property rights.
These protections may not be adequate to prevent our competitors
from copying or reverse-engineering our products. Our competitors
may independently develop technologies that are substantially
similar or superior to our technology. To protect our trade secrets
and other proprietary information, we require employees,
consultants, advisors and collaborators to enter into
confidentiality agreements. These agreements may not provide
meaningful protection for our trade secrets, know-how or other
proprietary information in the event of any unauthorized use,
misappropriation or disclosure of such trade secrets, know-how or
other proprietary information. The protective mechanisms we include
in our products may not be sufficient to prevent unauthorized
copying. Existing copyright laws afford only limited protection for
our intellectual property rights and may not protect such rights in
the event competitors independently develop similar products. In
addition, the laws of some countries in which our products are or
may be licensed do not protect our products and intellectual
property rights to the same extent as do the laws of the United
States.
Policing
unauthorized use of our products is difficult and litigation could
become necessary in the future to enforce our intellectual property
rights. 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.
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.
Claims
of infringement are becoming increasingly common as the software
industry develops and as related legal protections,
including but not limited to patents, are applied to software
products. Although we do not believe that our products infringe on
the rights of third parties, a third party may assert that our
technology or technologies of entities we acquire violates its
intellectual property rights. As the number of software products in
our markets increases and the functionality of these products
further overlap, we believe that infringement claims will become
more common. Any claims against us, regardless of their merit,
could:
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be expensive and
time consuming to defend;
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result in negative
publicity;
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force us to stop
licensing our products that incorporate the challenged intellectual
property;
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require us to
redesign our products;
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divert
management’s attention and our other resources;
and/or
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require us to enter
into royalty or licensing agreements in order to obtain the right
to use necessary technologies, which may not be available on terms
acceptable to us, if at all.
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We
believe that any successful challenge to our use of a trademark
or domain name could substantially diminish our ability to
conduct business in a particular market or jurisdiction and thus
decrease our revenue and result in possible losses to our
business.
We depend on a third-party cloud platform provider to host
our Unbound SaaS environment and managed services business and
if we were to experience a disruption in service, our business and
reputation could suffer.
We
host our SaaS and managed hosting customers via a third-party,
Amazon Web Services. If upon renewal date our third-party provider
does not provide commercially reasonable terms, we may be required
to transfer our services to a new provider, such as data center
facility, and we may incur significant equipment costs and possible
service interruption in connection with doing so. Interruptions in
our services might reduce our revenue, cause us to issue credits or
refunds to customers, subject us to potential liability, or harm
our renewal rates.
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.
Security
breaches could expose us to a risk of loss of our customers’
information, litigation and possible liability. While we have
security measures in place, they may be breached as a result of
third-party action, including intentional misconduct by computer
hackers, employee error, malfeasance or otherwise and result in
someone obtaining unauthorized access to our IT systems, our
customers’ data or our data, including our intellectual
property and other confidential business information. Because the
techniques used to obtain unauthorized access, or to sabotage
systems, change frequently and generally are not recognized until
launched against a target, we may be unable to implement adequate
preventative measures. In addition, our customers may authorize
third-party technology providers to access their customer data, and
some of our customers may not have adequate security measures in
place to protect their data that is stored on our services. Because
we do not control our customers or third-party technology
providers, or the processing of such data by third-party technology
providers, we cannot ensure the integrity or security of such
transmissions or processing. Malicious third parties may also
conduct attacks designed to temporarily deny customers access to
our services. Any security breach could result in a loss of
confidence in the security of our services, damage our reputation,
negatively impact our future sales, disrupt our business and lead
to legal liability.
We
rely on encryption and authentication technology from third parties
to provide the security and authentication to effectively secure
transmission of confidential information, including consumer
payment card numbers. Such technology may not be sufficient to
protect the transmission of such confidential information or these
technologies may have material defects that may compromise the
confidentiality or integrity of the transmitted data. Any
imposition of liability, particularly liability that is not covered
by insurance or is in excess of insurance coverage, could harm our
reputation, business and operating results. We might be required to
expend significant capital and other resources to protect further
against security breaches or to rectify problems caused by any
security breach, which, in turn could divert funds available for
corporate growth and expansion or future acquisitions.
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.
The loss of any of our key management personnel, combined with an
inability to find a suitable replacement, 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.
Because competition for highly qualified personnel is intense, we
might not be able to attract and retain the employees we need
to support our planned growth.
We
will need to increase the size and maintain the quality of our
sales force, software development staff and professional services
organization to execute our growth plans. To meet our objectives,
we must attract and retain highly qualified personnel with
specialized skill sets. Competition for qualified personnel can be
intense, and we might not be successful in attracting and retaining
them. Our ability to maintain and expand our sales, product
development and professional services teams will depend on our
ability to recruit, train and retain top quality people with
advanced skills who understand sales to, and the specific needs of,
our target customers. For these reasons, we have experienced, and
we expect to again experience in the future, challenges in hiring
and retaining highly skilled employees with appropriate
qualifications for our business. In addition to hiring services
personnel to meet our needs, we may also engage additional
third-party consultants as contractors, which could have a negative
impact on our financial results. If we are unable to hire or retain
qualified personnel, or if newly hired personnel fail to develop
the necessary skills or reach productivity slower than anticipated,
it would be more difficult for us to sell our products and
services, and we could experience a shortfall in revenue and not
achieve our planned growth.
Future acquisitions may be difficult to integrate into our existing
operations, may disrupt our business, dilute stockholder
value, divert management’s attention, or negatively affect
our operating results.
We
have acquired multiple businesses since our inception in
2000. Future 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 of or assumption of debt. Any such
acquisition may not be successful in generating revenues, income or
other returns to us, and the resources committed to such activities
will not be available to us for other purposes. Moreover, if we are
unable to access capital markets on acceptable terms or at all, we
may not be able to consummate acquisitions, or may have to do so
based upon less than optimal capital structure. Our inability to
take advantage of growth opportunities for our business or to
address risks associated with acquisitions or investments in
businesses may negatively affect our operating results.
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 an
adverse material effect on the price of our common
stock.
We are also subject to anti-takeover provisions under Delaware law,
which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and
may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our securities.
Provisions in our amended and restated bylaws and Delaware law may
have the effect of discouraging lawsuits against our directors and
officers.
Our
amended and restated bylaws require that derivative actions brought
in our name, actions against our directors, officers, other
employees or stockholders for breach of fiduciary duty and other
similar actions may be brought only in the Court of Chancery in the
State of Delaware. Any person or entity purchasing or otherwise
acquiring any interest in shares of our capital stock shall be
deemed to have notice of and consented to the forum provisions in
our amended and restated bylaws.
This
choice of forum provision may limit a stockholder’s ability
to bring a claim in a judicial forum that it finds favorable for
disputes with us or any of our directors, officers, other employees
or stockholders, which may discourage lawsuits with respect to such
claims. 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.
Increasing government regulation could affect our business and may
adversely affect our financial condition.
We are subject not only to regulations applicable
to businesses generally, but also to laws and regulations directly
applicable to electronic commerce. In addition, an inability
to satisfy the standards of certain voluntary third-party
certification bodies that our customers may expect, such as an
attestation of compliance with the Payment Card Industry
(“PCI”) Data Security Standards, may have an
adverse impact on our business and results. Further, there are
various statutes, regulations, and rulings relevant to the direct
email marketing and text-messaging industries, including the
Telephone Consumer Protection Act (“TCPA”), the CAN-SPAM Act and related Federal
Communication Commission (“FCC”) orders. The interpretation of many of
these statutes, regulations, and rulings is evolving in the courts
and administrative agencies and an inability to comply may have an
adverse impact on our business and results. If in the future we are
unable to achieve or maintain industry-specific certifications or
other requirements or standards relevant to our customers, it may
harm our business and adversely affect our
results.
We may also expand our business
in countries that have more stringent data protection laws than
those in the United States, and such laws may be inconsistent
across jurisdictions and are subject to evolving and differing
interpretations. In
particular, the European Union has passed the General Data
Protection Regulation (“GDPR”),
which came into force on May 25, 2018. The GDPR includes more
stringent operational requirements for entities that receive or
process personal data (as compared to U.S. privacy laws and
previous EU laws), along with significant penalties
for non-compliance, more robust obligations on data
processors and data controllers, greater rights for data subjects,
and heavier documentation requirements for data protection
compliance programs. Additionally, both laws
regulating privacy and third-party products purporting to address
privacy concerns could negatively affect the functionality of, and
demand for, our products and services, thereby reducing our
revenue.
Federal,
state, and foreign governments may adopt laws and regulations
applicable to our business. Any such legislation or regulation
could dampen the growth of the Internet and decrease its
acceptance. If such a decline occurs, companies may choose in the
future not to use our products and services. Any new laws or
regulations in the following areas could affect our
business:
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user
privacy;
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the pricing and
taxation of goods and services offered over the
Internet;
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the content of
websites;
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trademarks and
copyrights;
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consumer
protection, including the potential application of “do not
call” registry requirements on customers and consumer
backlash in general to direct marketing efforts of
customers;
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the online
distribution of specific material or content over
the Internet; or
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the characteristics
and quality of products and services offered over the
Internet.
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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.
Our
Certificate of Incorporation authorizes the issuance of up to
1.0 million 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
and
shares have been designated as Series B Preferred. We
may issue additional shares of preferred stock in order to
consummate a financing or other transaction, in lieu of the
issuance of common stock. The rights and preferences of any
such class or series of preferred stock would be established by our
board of directors in its sole discretion and may have dividend,
voting, liquidation and other rights and preferences that are
senior to the rights of our common stock.
We have never paid dividends on our common stock, and we do not
anticipate paying dividends on our common stock in the
future.
We
have never paid cash dividends on our common stock, and do not
believe that we will pay any cash dividends on our common
stock in the future. Because we have no plan to pay cash dividends
on our common stock, an investor would only realize income from his
investment in our shares if there is a rise in the market price of
our common stock, which is uncertain and
unpredictable.
Risks
Related to this Offering
Purchasers in this offering will experience immediate and
substantial dilution in the book value of their
investment.
You will incur
immediate and substantial dilution as a result of this offering.
After giving effect to the sale by us of 7,530,120 Class A Units,
at an assumed public offering price of $0.83 per Class A Unit
(which was the last reported sale price of our common stock on the
Nasdaq Capital Market on October 11, 2018), assuming no sale of any
Class B Units and after deducting estimated underwriting discounts
and commissions, estimated offering expenses payable by us and the
amounts necessary to repay the Term notes, including all accrued
interest, which amounted to approximately $10,000 as of October 11,
2018, upon consummation of this offering, you can expect an
immediate dilution of approximately $0.61 per share. See
“Dilution”
below for a more detailed discussion of the dilution you will incur
if you purchase securities in the offering.
Our management team may invest or spend the proceeds of this
offering in ways with which you may not agree or in ways which may
not yield a significant return.
Our
management will have broad discretion over the use of proceeds from
this offering. We currently intend to use the net proceeds from the
sale of securities offered by this prospectus for general
corporate purposes, including, but not limited to, research and
development, capital expenditures, repayment of indebtedness, and
additions to working capital. We may also use the net proceeds from
the sale of the securities under this prospectus to acquire or
invest in complementary businesses, technologies, products or
assets. However, our management will have broad discretion in the
application of the net proceeds from this offering and could spend
the proceeds in ways that do not improve our results of operations
or enhance the value of our common stock. The failure by management
to apply these funds effectively could result in financial losses
that could have a material adverse effect on our business, cause
the price of our common stock to decline and delay the development
of our product candidates.
The warrants are speculative and holders of the warrants will not
have rights of common stockholders until such warrants are
exercised.
The
warrants being offered do not confer any rights of common stock
ownership on their holders, such as voting rights or the right to
receive dividends, but rather merely represent the right to acquire
shares of common stock at a fixed price for a limited period of
time. Specifically, commencing on the date of issuance, holders of
the warrants may exercise their right to acquire the common stock
and pay an exercise price per share equal to 125% of the public
offering price, or $1.04 per share (assuming a public offering
price of $0.83 per Class A Unit, which was the last reported sale
price of our common stock on the Nasdaq Capital Market on October
11, 2018) prior to five years from the date of issuance, after
which date any unexercised warrants will expire and have no further
value. Moreover, there can also be no assurance that the market
price of our common stock will ever equal or exceed the exercise
price of the warrants, and consequently, whether it will ever be
profitable for holders of the warrants to exercise the
warrants.
There is no public market for the warrants or the Series B
Preferred.
There is no
established public trading market for the warrants or the Series B
Preferred offered in this offering, and we do not expect a market
to develop. In addition, we do not intend to apply to list the
warrants or the Series B Preferred on any national securities
exchange or other nationally recognized trading system, including
the Nasdaq Capital Market. Without an active market, the liquidity
of the warrants and the Series B Preferred will be
limited.
Sales of a substantial number of shares of our common stock, or the
perception that such sales may occur, may adversely impact the
price of our common stock.
Sales
of a substantial number of shares of our common stock in the public
market could occur at any time. These sales, or the perception that
such sales may occur, may adversely impact the price of our common
stock, even if there is no relationship between such sales and the
performance of our business. As of October 11, 2018,
we had 4,241,225 shares of common stock outstanding, as well as
stock options to purchase an aggregate of 459,846 shares of
our common stock at a weighted average exercise price of $6.81 per
share, outstanding warrants to purchase up to an aggregate of
546,151 shares of our common stock at a weighted average
exercise price of $6.16 per share and 161,455 shares of common
stock issuable upon conversion of our outstanding shares of Series
A Preferred. The exercise and/or conversion of such outstanding
derivative securities may result in further dilution of your
investment.
Holders of Series B Preferred will have limited voting
rights.
Holders of Series B
Preferred will vote with the common stock on an as-converted to
common stock basis, provided, however, that in no event will a
holder of shares of Series B Preferred Stock be entitled to vote a
number of shares in excess of such holder’s beneficial
ownership limitation. See “Description of Securities We Are
Offering.”
We may not have the funds necessary to fulfill our obligation to
repurchase the warrants in the event of the occurrence of a
fundamental transaction.
Under
certain circumstances, if a fundamental transaction (as defined in
the warrant) occurs, holders of the warrants being sold and issued
in this offering may require us to repurchase the remaining
unexercised portion of such warrants for an amount of cash equal to
the value of the warrant as determined in accordance with the Black
Scholes option pricing model and the terms of the warrants. Our
ability to repurchase the warrants depends on our ability to
generate cash flow in the future. To some extent, this is subject
to general economic, financial, competitive, legislative and
regulatory factors and other factors that are beyond our control.
We cannot assure you that we will maintain sufficient cash reserves
or that our business will generate cash flow from operations at
levels sufficient to permit us to repurchase the
warrants.
CAUTIONARY NOTES REGARDING FORWARD-LOOKING
STATEMENTS
This
prospectus, and any documents we incorporate by reference, contain
forward-looking statements that involve substantial risks and
uncertainties. All statements contained in this prospectus and any
documents we incorporate by reference other than statements of
historical facts, including statements regarding our strategy,
future operations, future financial position, future revenue,
projected costs, prospects, plans, objectives of management and
expected market growth, are forward-looking statements. These
statements involve known and unknown risks, uncertainties and other
important factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements.
The
words “anticipate,” “believe,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “predict,”
“project,” “target,”
“potential,” “will,” “would,”
“could,” “should,” “continue,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. These forward-looking statements include,
among other things, statements about:
●
our
ability to implement our business strategy;
●
anticipated
trends and challenges in our business and the markets in which we
operate;
●
our
expected future financial performance;
●
our
expectations regarding our operating expenses;
●
our
ability to anticipate market needs or develop new or enhanced
products to meet those needs;
●
our
expectations regarding market acceptance of our
products;
●
our
ability to compete in our industry and innovation by our
competitors;
●
our
ability to protect our confidential information and intellectual
property rights;
●
our
ability to successfully identify and manage any potential
acquisitions;
●
our
ability to manage expansion into international
markets;
●
our
ability to maintain or broaden our business relationships and
develop new relationships with strategic alliances, suppliers,
customers, distributors or otherwise;
●
our
ability to recruit and retain qualified sales, technical and other
key personnel;
●
our
ability to obtain additional financing;
●
our
ability to manage growth;
●
our
ability to maintain the listing of our common stock on the Nasdaq
Capital Market; and
●
other risks and uncertainties, including
those described in the
section entitled “Risk
Factors” in this
prospectus, as well as in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2017, which risk factors are
incorporated herein by reference.
These
forward-looking statements are only predictions and we may not
actually achieve the plans, intentions or expectations disclosed in
our forward-looking statements, so you should not place undue
reliance on our forward-looking statements. Actual results or
events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make.
We have based these forward-looking statements largely on our
current expectations and projections about future events and trends
that we believe may affect our business, financial condition and
operating results. We have included important factors in the
cautionary statements included in this prospectus, as well as
certain information incorporated by reference into this prospectus,
that could cause actual future results or events to differ
materially from the forward-looking statements that we make. Our
forward-looking statements do not reflect the potential impact of
any future acquisitions, mergers, dispositions, joint ventures or
investments we may make. Except as required by applicable law,
including the securities laws of the United States and the rules
and regulations of the SEC, we do not plan to publicly update or
revise any forward-looking statements contained herein after we
distribute this prospectus, whether as a result of any new
information, future events or otherwise.
You should read
this prospectus and any documents we incorporate by reference with
the understanding that our actual future results may be materially
different from what we expect. We do not assume any obligation to
update any forward-looking statements whether as a result of new
information, future events or otherwise, except as required by
applicable law.
USE
OF PROCEEDS
We
estimate that the net proceeds to us from the sale of our
securities by us in this offering will be approximately $4.6
million, or approximately $5.4 million if the underwriters exercise
their over-allotment option in full, assuming a public offering
price of $0.83 per Class A Unit (the last reported sale price
of our common stock on the Nasdaq Capital Market on October 11,
2018) and $1,000 per Class B Unit, in each case, after
deducting the estimated underwriting discounts and commissions,
estimated offering expenses payable by us, the amounts necessary to
repay the Term Notes (as set forth below), and excluding the
proceeds, if any, from the exercise of the warrants. The public
offering price per Class A Unit will be determined between us, the
underwriters and investors based on market conditions at the time
of pricing, and may be at a discount to the current market price of
our common stock. We will only receive additional proceeds from the
exercise of the warrants issuable in connection with this offering
if such warrants are exercised at their exercise price of 125% of
the per unit public offering price of the Class A Units and the
holders of such warrants pay the exercise price in cash upon such
exercise and do not utilize the cashless exercise provision of the
warrants.
Each $0.25 increase (decrease) in the assumed
public offering price of $0.83 per Class A Unit would increase
(decrease) the net proceeds to us from this offering by
approximately $1.8 million, assuming the number of securities
offered by us, as set forth on the cover page of this prospectus,
remains the same and after deducting the estimated underwriting
discounts and commissions, estimated offering expenses payable by
us, and the amounts necessary to repay the Term Notes,
including all accrued interest, which amounted to approximately
$10,000 as of October 11, 2018. We may
also increase or decrease the number of securities we are offering.
Each increase (decrease) of 1.0 million shares in the number of
securities we are offering would increase (decrease) the net
proceeds to us from this offering by approximately $771,900,
assuming that the assumed public offering price per Class A Unit
remains the same, and after deducting the estimated underwriting
discounts and commissions, estimated offering expenses payable by
us, and the amounts necessary to repay the Term
Notes, including all accrued interest,
which amounted to approximately $10,000 as of October 11,
2018. This information is illustrative only, and we will
adjust this information based on the actual public offering price
per Class A Unit and other terms of this offering determined at
pricing. We do not expect that a change in the public offering
price or the number of shares by these amounts would have a
material effect on our intended uses of the net proceeds from this
offering, although it may impact the amount of time prior to which
we may need to seek additional capital.
On September 7, 2018, we entered into a Note
Purchase Agreement (the “Purchase
Agreement”) with certain
accredited investors (each, a “Purchaser”), pursuant to which we sold and issued to
the Purchasers Term Notes in the aggregate principal amount of
$941,176, which Term Notes have an original issue discount of
fifteen percent (15%), bear interest at a rate of twelve percent
(12%) per annum, and have a maturity date of the earlier to occur
of (a) six months from the date of execution of the Purchase
Agreement, or (b) the consummation of a debt or equity financing
resulting in the gross proceeds to the Company of at least $3.0
million. We received net cash proceeds in the aggregate amount of
$760,000 through the sale of the Term Notes, after subtracting the
original issue discount and debt issuance costs, which proceeds we
used as general working capital. Upon consummation of this
offering, assuming that we receive gross proceeds in an amount
exceeding $3.0 million, we intend to allocate approximately
$941,176, plus any accrued interest, to the repayment of the Term
Notes. As of
October 11, 2018, the Term Notes had accrued
approximately $10,000 in interest. Michael Taglich, a
member of the Company’s Board of Directors, and Robert
Taglich, Michael Taglich’s brother and a former
member of the Company's Board of Directors, each purchased Term
Notes in the approximate amount of $121,618, and therefore will
each be entitled to receive a portion of the proceeds from the
offering used to repay the Term
Notes.
We
expect to use the remaining net proceeds from this offering for
general corporate purposes including, but not limited to, research
and development, capital expenditures, repayment of indebtedness,
and additions to working capital. We may also use a portion of the
net proceeds from this offering to pursue potential strategic
acquisitions, although we do not have any specific plans or
arrangements to do so at this time. We cannot currently
allocate specific percentages of the net proceeds that we may use
for the purposes specified above.
Pending other uses, we intend to invest our proceeds from the
offering in short-term investments or hold them as cash. We cannot
predict whether the proceeds invested, if any, will yield a
favorable return. Our management will have broad discretion in the
use of the net proceeds from the offering, and investors will be
relying on the judgment of our management regarding the application
of the net proceeds.
Market
Information
Our
common stock is listed on the Nasdaq Capital Market under the
symbol “BLIN.”
On
October
11, 2018, the closing
price for our common stock as reported on the Nasdaq Capital Market
was $0.83 per share. Shown below
is the range of high and low sales prices for our common stock
for the periods indicated as reported by the Nasdaq Capital Market.
Such quotations represent inter-dealer prices without retail
markup, markdown or commission and may not necessarily represent
actual transactions. In addition, the below figures have been
adjusted to reflect the 1-for-5 stock split effectuated by us on
July 24, 2017.
|
Year Ending September 30, 2019
|
High
|
Low
|
|
|
|
|
|
First Quarter
(through October 11, 2018)
|
$1.18
|
$0.79
|
|
Year
Ending September 30, 2018
|
High
|
Low
|
|
|
|
|
|
Fourth
Quarter
|
$3.75
|
$0.79
|
|
Third
Quarter
|
$2.19
|
$1.14
|
|
Second
Quarter
|
$2.64
|
$1.84
|
|
First
Quarter
|
$3.03
|
$2.22
|
|
Year
Ending September 30, 2017
|
High
|
Low
|
|
|
|
|
|
Fourth
Quarter
|
$3.12
|
$2.12
|
|
Third
Quarter
|
$4.15
|
$2.65
|
|
Second
Quarter
|
$4.55
|
$3.11
|
|
First
Quarter
|
$3.95
|
$2.26
|
|
Year
Ending September 30, 2016
|
High
|
Low
|
|
|
|
|
|
Fourth
Quarter
|
$5.45
|
$3.80
|
|
Third
Quarter
|
$7.75
|
$3.65
|
|
Second
Quarter
|
$5.30
|
$3.10
|
|
First
Quarter
|
$6.65
|
$5.30
|
As of
October
11, 2018,
our common stock was held of record by approximately 1,700
stockholders. Because many of our
shares are held by brokers and other institutions on behalf of
stockholders, we are unable to estimate the total number of
individual stockholders represented by these record
holders.
DIVIDEND POLICY
We have never
declared or paid cash dividends on our common stock, and do not
anticipate paying cash dividends to our holders of our common stock
in the near future. We currently intend to retain all available
funds and any future earnings for use in the operation of our
business. Therefore, we do not currently expect to pay any cash
dividends on our common stock for the foreseeable
future.
We
currently have outstanding Series A Preferred and our Board of
Directors has the right to authorize the issuance of preferred
stock in the future, without further stockholder approval, the
holders of which may have preferences over the holders of our
common stock as to payment of dividends. Cash dividends are currently
payable to holders of our Series A Preferred at a rate of 12% per
year.
CAPITALIZATION
The following table
sets forth our cash and cash equivalents and capitalization as of
June 30, 2018:
|
|
●
|
on an actual basis
as of June 30, 2018;
|
|
|
●
|
on a pro forma
basis, giving effect to the sale of the Term Notes in the aggregate
principal amount of $941,176, which sales occurred on September 7,
2018, and for which we received cash proceeds in the aggregate
amount of $760,000 after subtracting the original issue discount
and debt issuance costs; and
|
|
|
●
|
on a pro forma as
adjusted basis to give effect to the
sale by us in this offering of 7,530,120 Class A Units at the
assumed public offering price of $0.83 per Class A Unit (which was
the last reported sale price of our common stock on the Nasdaq
Capital Market on October 11, 2018), after deducting underwriting
discounts and commissions, estimated offering expenses payable by
us, and the amounts necessary to repay the Term Notes, including
all accrued interest, which amounted to approximately $10,000 as of
October 11, 2018. The pro forma as adjusted basis assumes no sale
of Class B Units and excludes the proceeds, if any, from the
exercise of any warrants issued in this
offering.
|
The pro forma and pro forma as adjusted
information below is illustrative only, and our
capitalization following the closing of this offering will be
adjusted based on the actual public offering price and other terms
of this offering determined at pricing as well as our actual
expenses. You should read this table together with our consolidated
financial statements and the related notes and the sections
entitled “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in our Quarterly Reports on
Form 10-Q for the quarters ended December 31, 2017, March 31, 2018
and June 30, 2018, and our Annual Report on Form 10-K for the
fiscal year ended September 30, 2017, which are incorporated
by reference herein.
|
|
As
of June 30, 2018
|
||
|
(unaudited,
dollars in thousands)
|
Actual
|
Pro
Forma(1)
|
Pro Forma
As Adjusted(2)
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 427
|
$ 1,187
|
$ 5,755
|
|
|
|
|
|
|
Debt, current
portion, less unamortized discount and issuance costs
|
198
|
958
|
198
|
|
Long term debt, net
of current portion
|
2,810
|
2,810
|
2,810
|
|
Other long term
liabilities
|
234
|
234
|
234
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
Series
A Convertible Preferred stock - $0.001 par
value; 1,000,000 shares authorized; 264,000 and 262,364 at June 30,
2018 and 245,172 and 243,536 at September 30, 2017, issued and
outstanding (liquidation preference $2,624, as of June 30,
2018)
|
-
|
-
|
-
|
|
Common stock -
$0.001 par value; 50,000,000 shares authorized; 4,241,225 shares
issued at June 30, 2018; 4,200,219 issued at September 30, 2017;
and 10,491,225 shares issued, pro forma as adjusted
|
5
|
5
|
13
|
|
Additional paid-in
capital
|
66,430
|
66,430
|
71,941
|
|
Accumulated
deficit
|
(60,752)
|
(60,752)
|
(60,943)
|
|
Accumulated other
comprehensive loss
|
(351)
|
(351)
|
(351)
|
|
Total
stockholders’ equity
|
5,332
|
5,332
|
10,660
|
|
Total
capitalization
|
$ 11,422
|
$ 12,182
|
$ 16,750
|
|
(1)
|
The pro forma figures give effect to the sale by
the Company of certain term promissory notes (the
“Term
Notes”) in the aggregate
principal amount of $941,176, which sales occurred
on September 7, 2018. After recording $141,176 of original
issue discount and debt issuance costs of $40,000, the Company
received net cash proceeds in the aggregate amount of $760,000 for
the Term Notes. The original issue discount and debt issuance costs
are recorded as a contra liability and will be amortized over the
life of the Term Notes. The Term Notes have an original issue
discount of fifteen percent (15%), bear interest at a rate of
twelve percent (12%) per annum, and mature on the earlier to occur
of (i) six months from September 7, 2018, or (ii) the consummation
of a debt or equity financing resulting in gross proceeds to the
Company of at least $3.0 million. In connection with the issuance of the Term Notes,
each purchaser also entered into a Subordination Agreement with the
Company’s lenders, Heritage Bank of Commerce and Montage
Capital II, L.P. (the “Lenders”), pursuant to which the purchasers agreed
to subordinate (i) all of the Company’s indebtedness and
obligations to the purchasers, whether presently existing or
arising in the future, to all of the Company’s indebtedness
to the Lenders, and (ii) all of the purchasers’ security
interests, if any, to all of the Lenders’ security interests
in property of the Company.
|
|
(2)
|
Each $0.25
increase (decrease) in the assumed public offering price
per Class A Unit would increase (decrease) the
amount of cash and cash equivalents, working capital, total assets,
and total stockholders’ equity by approximately $1.8 million,
assuming the number of Class A Units offered by us, as set forth on
the cover page of this prospectus, remains the same, and after
deducting underwriting discounts and commissions, estimated
offering expenses payable by us, and the amounts necessary to repay
the Term Notes, including all accrued interest, which amounted to
approximately $10,000 as of October 11, 2018. We may also increase or
decrease the number of Class A Units to be issued in this offering.
Each increase (decrease) of 1.0 million Class A Units offered
by us would increase (decrease) the as adjusted amount of cash and
cash equivalents, working capital, total assets and total
stockholders’ deficit by approximately $771,900, assuming the
assumed public offering price per Class A Unit remains the same,
and after deducting underwriting discounts and commissions,
estimated offering expenses payable by us, and the amounts
necessary to repay the Term Notes, including all accrued interest,
which amounted to approximately $10,000 as of October 11,
2018.
|
The
number of shares of our common stock that will be outstanding
immediately after the offering is based on 4,241,225 shares
outstanding as of June 30, 2018, and assumes the issuance and
sale of 7,530,120 Class A Units in this offering and no Class B
Units. Unless we specifically state otherwise, the share
information in this prospectus excludes:
●
459,846
shares of our common stock issuable upon the exercise of stock
options outstanding at a weighted-average exercise price of $6.81
per share;
●
546,151
shares of common stock issuable upon the exercise of warrants at a
weighted-average exercise price of $6.16 per share;
●
260,534
shares of common stock reserved for future issuance under our 2016
Plan; and
●
161,455
shares of common stock issuable upon conversion of 262,364
outstanding shares of Series A Preferred; and
●
376,506 shares of common stock issuable upon the exercise of
the Representative’s Warrants to be issued to the
representative of the underwriters.
The
above numbers asssumes no sale of Class B Units and
reflect the 1-for-5 stock split effectuated by the Company on July
24, 2017.
DILUTION
If you purchase
securities in this offering, your interest will be diluted to the
extent of the difference between the public offering price per
Class A Unit in this offering and our as adjusted net tangible
book value per share of our common stock after this offering
immediately after this offering assuming no value attributed to the
warrants, and the warrants are accounted for and classified as
equity. This calculation does not reflect any dilution associated
with the sale and exercise of the warrants.
Net tangible book value (deficit) per share of our
common stock is determined at any date by subtracting our total
liabilities from the amount of our total tangible assets (total
assets less intangible assets) and dividing the difference by the
number of shares of our common stock deemed to be outstanding at
that date. Dilution in net tangible book value
(deficit) per share represents the difference between the amount
per share paid by investors in this offering and the net tangible
book value (deficit) per share of our common stock immediately
after this offering.
Our historical net
tangible book value (deficit) as of June 30, 2018 was approximately
$(2.7) million, or $(0.65) per share. Our historical net tangible book value
(deficit) per share represents our total tangible
assets less our total liabilities, divided by the number of shares
of common stock outstanding as of June 30,
2018.
Our pro forma net tangible book value (deficit) as
of June 30, 2018 was approximately $(2.7) million, or $(0.65) per share of common stock. Pro forma net tangible
book value (deficit) per share represents our total tangible assets
less our total liabilities, divided by the number of shares of
common stock outstanding as of June 30, 2018, after giving effect
to giving effect to the sale by us of the Term Notes,
including all accrued interest, which amounted to approximately
$10,000 as of October 3, 2018, in the aggregate principal amount of
$941,176, which sales occurred on September 7, 2018, and for which
we received cash proceeds in the aggregate amount of $760,000 after
subtracting the original issue discount and debt issuance costs.
After further giving effect to (i) the pro forma adjustment
described above, (ii) the repayment of the Term Notes upon
consummation of this offering, and (iii) the sale by us of
7,530,120 Class A Units at an assumed public offering price of
$0.83 per Class A Unit (the closing price of our common stock as
quoted on the Nasdaq Capital Market on October 11, 2018) and no
Class B Units, assuming no exercise of the warrants
included in the Units, and after deducting the underwriting
discounts and commissions and estimated offering expenses payable
by us, our as adjusted net tangible book value as of June 30, 2018
would have been approximately $2.6 million, or $0.22
per share. This represents an immediate increase in net tangible
book value of $0.87 per share to existing stockholders
and immediate dilution in net tangible book value of
$0.61 per share to investors in this offering. The
following table illustrates this dilution on a per share
basis:
|
Assumed public
offering price per share
|
|
$0.83
|
|
Historical net
tangible book value (deficit) per share as of June 30,
2018
|
$ (0.65)
|
|
|
Pro forma increase
in net tangible book value per share attributable to the sale of
term notes described above
|
$ -
|
|
|
Pro forma net
tangible book value per share as of June 30, 2018
|
$ (0.65)
|
|
|
Increase in pro
forma net tangible book value per share attributable to investors
purchasing Units from us in this offering
|
$ 0.87
|
|
|
|
|
|
|
Pro forma
as-adjusted net tangible book value per share after this
offering
|
|
$ 0.22
|
|
|
|
|
|
Dilution in pro
forma as adjusted net tangible book value per share to new
investors in this offering
|
|
$ 0.61
|
The information
above assumes that no share of Class B Units are sold in this
offering and that the underwriters do not exercise their
over-allotment option. If the underwriters exercise their
over-allotment option in full, the pro forma as adjusted net
tangible book value would be approximately $0.27, an increase of
approximately $0.92 per share to existing stockholders and an
immediate dilution of approximately 0.56 per share to new investors
purchasing Class A Units in this offering, after deducting the
underwriting discounts and commissions, and estimated offering
expenses payable by us.
The number of
shares of our common stock to be outstanding
immediately after this offering is based on 4,241,225
shares outstanding as of June 30, 2018:
●
excludes 459,846 shares of our common stock issuable upon
the exercise of stock options outstanding at a weighted-average
exercise price of $6.81 per share;
●
excludes 546,151 shares of common stock issuable upon the
exercise of warrants at a weighted-average exercise price of $6.16
per share;
●
excludes 260,534 shares of common stock reserved for future
issuance under our 2016 Plan;
●
excludes 161,455 shares of common stock issuable upon
conversion of 262,364 outstanding shares of Series A
Preferred;
●
excludes 376,506 shares of common stock issuable upon the
exercise of the Representative’s Warrants to be issued to the
representative of the
underwriters;
●
assumes no
conversion of outstanding shares of Series A
Preferred;
●
assumes no
shares of Series B Preferred are sold in this
offering;
●
assumes no
exercise of outstanding warrants or the outstanding stock options
issued under the 2016 Plan;
and
●
assumes no
exercise by the underwriters of their over-allotment
option.
To
the extent we sell any Class B Units in this offering, the same
aggregate number of common stock equivalents resulting from this
offering would be convertible under the Series B Preferred issued
as part of the Class B Units.
If the underwriters exercise their over-allotment
option in full, the percentage of shares of common
stock held by existing stockholders will decrease to approximately
3.3% of the total number of shares of our common stock
outstanding after this offering, and the number of shares held by
new investors will increase to 8,659,640, or
approximately 6.7% of the total number of shares of
common stock outstanding after the
offering.
To the extent that
outstanding options or warrants are exercised, or our lines of
credit or outstanding shares of Series A Preferred are converted
into shares of common stock, investors in this offering will
experience further dilution. In addition, we may choose to raise
additional capital due to market conditions or strategic
considerations even if we believe we have sufficient funds for our
current or future operating plans. To the extent that additional
capital is raised through the sale of equity or convertible debt
securities, the issuance of these securities could result in
further dilution to our stockholders.
DESCRIPTION OF OUR
SECURITIES
The following summary of the rights of our capital stock is not
complete and is subject to and qualified in its entirety by
reference to our certificate of incorporation and bylaws, copies of
which are filed as exhibits to our Annual Report on Form 10-K for
the year ended September 30, 2017, filed with the SEC on December
21, 2017, which is incorporated by reference
herein.
General
Our authorized capital stock consists of 50.0
million shares of our common stock, $0.001 par value per share, and
1.0 million shares of preferred stock, $0.001 par value per share.
The following is a description of our common stock and certain
provisions of our amended and restated certificate of incorporation
(“Charter”), and our amended and restated bylaws
(“Bylaws”), and certain provisions of Delaware law.
This summary does not purport to be complete and is qualified in
its entirety by the provisions of our Charter and our Bylaws,
copies of which have been filed with the SEC as exhibits to our
periodic filings under the Securities and Exchange Act of 1934, as
amended (the “Exchange
Act”), and
are also incorporated by reference as exhibits to the registration
statement of which this prospectus is a
part.
As of October
11, 2018,
there were issued and outstanding, or reserved for
issuance:
●
4,241,255 shares of common stock held by
approximately 1,700 stockholders of record;
●
459,846
shares of our common stock issuable upon the exercise of stock
options outstanding at a weighted-average exercise price of $6.81
per share;
●
546,151
shares of common stock issuable upon the exercise of warrants at a
weighted-average exercise price of $6.16 per share;
●
260,534
shares of common stock reserved for future issuance under our 2016
Plan;
●
161,455 shares of common stock issuable upon
conversion of 262,364 outstanding shares of Series A Preferred;
and
●
376,506 shares of common stock issuable upon the exercise of
the Representative’s Warrants to be issued to the
representative of the underwriters.
The
above numbers reflect the 1-for-5 stock split effectuated by the
Company on July 24, 2017.
Common Stock
Except
as otherwise expressly provided in our Charter, or as required by
applicable law, all shares of our common stock have the same rights
and privileges and rank equally, share ratably and are identical in
all respects as to all matters, including, without limitation,
those described below. All outstanding shares of common stock are
fully paid and nonassessable.
Voting
Rights. The holders of
common stock are entitled to one vote per share on all matters. The
common stock does not have cumulative voting rights, which means
that holders of the shares of common stock with a majority of the
votes to be cast for the election of directors can elect all
directors then being elected.
Dividends. Each share of common stock has an equal and
ratable right to receive dividends to be paid from our assets
legally available therefore when, as and if declared by our Board
of Directors. We have never declared or paid cash dividends on our
common stock, and we do not anticipate paying cash dividends on our
common stock in the foreseeable future.
Liquidation. In
the event we dissolve, liquidate or wind up, the holders of common
stock are entitled to share equally and ratably in the assets
available for distribution after payments are made to our creditors
and to the holders of any outstanding preferred stock we may
designate and issue in the future with liquidation preferences
greater than those of the common stock.
Other. The holders of shares of our common stock
have no preemptive, subscription or redemption rights and are not
liable for further call or assessment. All of the outstanding
shares of common stock are, and the shares of
common stock offered hereby will be, fully paid and
nonassessable.
Transfer Agent and Registrar
The
transfer agent and registrar for our common stock is the American
Stock Transfer & Trust Company, LLC.
Preferred Stock
We
are authorized, subject to limitations prescribed by Delaware law
and our Charter, to issue up to 1.0 million shares of preferred
stock in one or more series, to establish from time to time the
number of shares to be included in each series and to fix the
designation, powers, preferences and rights of the shares of each
series and any of its qualifications, limitations or restrictions.
Our Board of Directors can increase or decrease the number of
shares of any series, but not below the number of shares of that
series then outstanding, without any further vote or action by our
stockholders. Our Board of Directors may authorize the issuance of
preferred stock with voting or conversion rights that could
adversely affect the voting power or other rights of the holders of
the common stock. The issuance of preferred stock, while providing
flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, have the effect of
delaying, deferring or preventing a change in control of the
Company and may adversely affect the market price of our common
stock and the voting and other rights of the holders of our common
stock.
Series A Preferred
In October 2014, our Board of Directors authorized
the creation of a series of up to 264,000 shares of Series A
Preferred. The Certificate of Designation of Preferences, Rights
and Limitations of the Series A Convertible Preferred
was filed with the Delaware Secretary
of State on October 28, 2014. As of October 11, 2018, there were
264,000 shares of Series A Preferred issued and 262,364 shares of
Series Preferred outstanding.
As of October 11, 2018, an aggregate
total of 1,636 shares of Series A Preferred have been converted
into 1,007 shares of common stock. There will be no further
issuances of Series A Preferred.
Voting
Rights. Shares of Series A Preferred vote
on an as-converted basis along with shares of our common
stock.
Conversion.
Shares of Series A Preferred may be
converted, at the option of the holder, at any time into such
number of shares of our common stock (“Conversion
Shares”) equal (i) to the
number of shares of Series A Preferred to be converted, multiplied
by the stated value of $10.00 per share (the
“Stated
Value”) and (ii) divided
by the conversion price in effect at the time of conversion,
currently $16.25.
Any
accrued but unpaid dividends on the shares of Series A Preferred to
be converted shall also be converted in shares of our common stock
at the Conversion Price. We also have the right to require the
holders to convert shares of Series A Preferred into Conversion
Shares if (i) the Company’s common stock has closed at or
above $32.50 per share for ten consecutive trading days and (ii)
the Conversion Shares are (A) registered for resale on an effective
registration statement or (B) may be resold pursuant to Rule
144.
Dividends. Cumulative dividends are currently payable in cash
at a rate of 12% per year. The Series A Preferred is senior to our
common stock and any other stock with respect to dividends
rights.
Liquidation.
In the event of any liquidation,
dissolution, or winding up of the Company, the holders of shares of
Series A Preferred will be entitled to receive in preference to the
holders of common stock and any other stock, the amount equal to
the Stated Value per share of Series A Preferred plus declared and
unpaid dividends, if any. After such payment has been made, the
remaining assets of the Company will be distributed ratably to the
holders of common stock.
Anti-Takeover Effects of Certain Provisions of Delaware Law and of
the Company’s Certificate of Incorporation and
Bylaws
Delaware Law
We are subject to Section 203
(“Section 203”) of the Delaware General Corporation Law
(the “DGCL”). In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in “business
combination” transactions with any “interested
stockholder” for a period of three years following the time
that the stockholder became an interested stockholder,
unless:
●
prior
to the time the stockholder became an interested stockholder,
either the applicable business combination or the transaction which
resulted in the stockholder becoming an interested stockholder is
approved by the corporation’s board of
directors;
●
upon
consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the voting stock outstanding (but not the
voting stock owned by the interested stockholder) shares owned by
directors who are also officers of the corporation and shares owned
by employee stock plans in which the employee participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer;
or
●
at
or subsequent to the time that the stockholder became an interested
stockholder, the business combination is approved by the
corporation’s board of directors and authorized at an annual
or special meeting of stockholders by the affirmative vote of at
least 66 2⁄3% of the outstanding voting stock which is not
owned by the interested stockholder.
A
“business combination” is defined to include, in
general and subject to exceptions, a merger of the corporation with
the interested stockholder; a sale of 10% or more of the market
value of the corporation’s consolidated assets to the
interested stockholder; certain transactions that result in the
issuance of the corporation’s stock to the interested
stockholder; a transaction that has the effect of increasing the
proportionate share of the corporation’s stock owned by the
interested stockholder; and any receipt by the interested
stockholder of loans, guarantees or other financial benefits
provided by the corporation. An “interested
stockholder” is defined to include, in general and subject to
exceptions, a person that (1) owns 15% or more of the outstanding
voting stock of the corporation, or (2) is an
“affiliate” or “associate” (as defined in
Section 203) of the corporation and was the owner of 15% or more of
the corporation’s outstanding voting stock at any time within
the prior three year period.
A
Delaware corporation may opt out of Section 203 with an express
provision in its original certificate of incorporation or by an
amendment to its certificate of incorporation or bylaws expressly
electing not to be governed by Section 203 and approved by a
majority of its outstanding voting shares. We have not opted out of
Section 203. As a result, Section 203 could delay, deter or prevent
a merger, change of control or other takeover of our company that
our stockholders might consider to be in their best interests,
including transactions that might result in a premium being paid
over the market price of our common stock, and may also limit the
price that investors are willing to pay in the future for our
common stock.
Undesignated Preferred Stock
The
ability to authorize undesignated preferred stock makes it possible
for our Board of Directors to issue one or more series of preferred
stock with voting or other rights or preferences. These and other
provisions may have the effect of deferring hostile takeovers or
delaying changes in control or management of our
company.
Requirements for Advance Notification of Stockholder Nominations
and Proposals
Our
Bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election
as directors, other than nominations made by or at the direction of
the Board of Directors or a committee of the Board of
Directors.
Stockholder Action by Written Consent; Special Meetings of
Stockholders
Our
Bylaws prohibit our stockholders from taking action by written
consent in lieu of a meeting.
Amendment of Certificate of Incorporation and Bylaws
Our
Charter may be amended by the affirmative vote of a majority of the
aggregate number of shares of each class of our capital stock
issued and outstanding after a resolution of our Board of Directors
declaring the advisability of such amendment has been adopted in
accordance with Delaware law. Our Bylaws may be amended by the
affirmative vote of a majority of the aggregate number of shares of
each class of our capital stock issued and outstanding (and
entitled to vote on the subject matter) present in person or
represented by proxy at a meeting of stockholders provided that
notice thereof is stated in the written notice of the meeting. Our
Bylaws may also be amended by a majority of the Board of Directors
in accordance with Delaware law and our Charter.
DESCRIPTION OF SECURITIES WE ARE
OFFERING
We
are offering up to 7,530,120 Class A Units, assuming a public
offering price of $0.83 per Class A Unit (which was the last
reported sale price of our common stock on the Nasdaq Capital
Market on October 11, 2018), and assuming no exercise of the
over-allotment option by the underwriters. We are also offering to
each purchaser whose purchase of Class A Units in this offering
would otherwise result in the purchaser, together with its
affiliates and certain related parties, beneficially owning more
than 4.99% of our outstanding common stock immediately following
the consummation of this offering, the opportunity to purchase
Class B Units, in lieu of purchasing Class A Units. Each Class B
Unit will consist of one share of newly designated Series B
Preferred, with a stated value of $1,000 per share and convertible
into shares of our common stock at a conversion price equal to the
per unit public offering price of the Class A Units, together with
the equivalent number of warrants as would have been issued to such
purchaser of Class B Units if they had purchased Class A Units
based on the public offering price of the Class B Units purchased.
For each Class B Unit we sell, the number of Class A Units we are
offering will be decreased on a dollar-for-dollar basis. Because we
will issue a warrant as part of each Unit, the number of warrants
sold in this offering will not change as a result of a change in
the mix of the Units sold. The number of shares of our common stock
outstanding after this offering will fluctuate depending on how
many Class B Units are sold in this offering and whether and to
what extent holders of Series B Preferred shares convert their
shares to common stock. We are also offering the shares of common
stock issuable upon exercise of warrants as a part of the Class B
Units and upon conversion of the Series B Preferred included with
each Series B Unit.
Common Stock
The material terms and provisions of our common
stock and each other class of our securities which qualifies or
limits our common stock are described under the caption
“Description of Our
Securities” in this
prospectus.
Preferred Stock
Pursuant
to the terms of our Charter, ourBoard of Directors has the
authority to issue preferred stock in one or more classes or series
and to fix the designations, powers, preferences and rights, and
the qualifications, limitations or restrictions thereof, including
dividend rights, conversion right, voting rights, terms of
redemption, liquidation preferences and the number of shares
constituting any class or series, without further vote or action by
the stockholders.
Series B Convertible Preferred Stock
The following is a summary of the material terms of the Series B
Preferred. This summary is not complete. The following summary of
the terms and provisions of the Series B Preferred is qualified in
its entirety by reference to the Certificate of Designation of the
Series B Preferred, the form of which has been filed as an exhibit
to the registration statement of which this prospectus is a
part.
General. Our
Board of Directors has designated up to
shares
of the 1.0 million authorized shares of preferred stock as Series B
Convertible Preferred Stock. When issued, the shares of Series B
Preferred will be validly issued, fully paid and non-assessable.
Each share of Series B Preferred will have a stated value of $1,000
per share.
Rank. The Series B Preferred will rank junior to the
Series A Preferred Stock and on parity to our common
stock.
Conversion. Each
share of Series B Preferred is convertible at any time at the
option of the holder (subject to the limitations set forth below)
into that number of shares of our common stock (subject to
adjustment as provided in the related certificate of designation of
preferences, rights and limitations) equal to the stated value of
the Series B Preferred ($1,000 per share) divided by the conversion
price, which will be equal to the per unit public offering price of
the Class A Units in this offering. Holders of Series B Preferred
will be prohibited from converting Series B Preferred into shares
of our common stock if, as a result of such conversion, the holder,
together with its affiliates, would own more than 4.99% of the
total number of shares of our common stock then issued and
outstanding. However, any holder may increase or decrease such
percentage to any other percentage not in excess of 9.99% upon at
least 61 days’ prior notice from the holder to
us.
Liquidation.
Subject to the senior rights of the
Series A Preferred stock, in the event we dissolve, liquidate or
wind up, the holders of Series B Preferred will be entitled to
participate on an as-converted-basis with holders of common stock
in any distribution of assets of the company to the holders of our
common stock.
Voting
Rights. Except as required
by our Charter or by the Delaware General Corporation Law, shares
of Series B Preferred vote on an as-converted basis along with
shares of our common stock.
Dividends. Shares
of Series B Preferred will not be entitled to receive any
dividends, unless and until specifically declared by our Board of
Directors;provided, however,
subject to any senior rights of the Series A Preferred Stock, the
holders of the Series B Preferred will participate, on an
as-if-converted-to-common stock basis, in any dividends to the
holders of common stock.
Redemption. We
are not obligated to redeem or repurchase any shares of Series B
Preferred. Shares of Series B Preferred are not otherwise entitled
to any redemption rights or mandatory sinking fund or analogous
fund provisions.
Exchange
Listing. We do not plan on
making an application to list the Series B Preferred on the Nasdaq
Capital Market, or any other national securities exchange or other
nationally recognized trading system.
Warrants
The following summary of certain terms and provisions of the
warrants that are being offered hereby is not complete and is
subject to, and qualified in its entirety by, the provisions of the
warrants, the form of which is filed as an exhibit to the
registration statement of which this prospectus forms a part.
Prospective investors should carefully review the terms and
provisions of the form of warrant for a complete description of the
terms and conditions of the warrants.
Exercisability. The
warrants are exercisable at any time after their original issuance
and will expire on the fifth anniversary of the original issuance
date. The warrants will be exercisable, at the option of each
holder, in whole or in part by delivering to us a duly executed
exercise notice and by payment in full in immediately available
funds for the number of shares of common stock purchased upon such
exercise. If at the time of exercise, there is no effective
registration statement registering, or no current prospectus
available for, the issuance of the shares of common stock to the
holder, then the common warrant may only be exercised through a
cashless exercise, in which case the holder would receive upon such
exercise the net number of shares of common stock determined
according to the formula set forth in the warrant. No fractional
shares of common stock will be issued in connection with the
exercise of a warrant. In lieu of fractional shares, we will pay
the holder an amount in cash equal to the fractional amount
multiplied by the fair market value of any such fractional
shares.
Exercise
Limitations. Under the
warrants, we may not effect the exercise of any warrant, and a
holder will not be entitled to exercise any portion of any warrant,
which, upon giving effect to such exercise, would cause (i) the
aggregate number of shares of our common stock beneficially owned
by the holder (together with its affiliates) to exceed 4.99% of the
number of shares of our common stock outstanding immediately after
giving effect to the exercise, or (ii) the combined voting power of
our securities beneficially owned by the holder (together with its
affiliates) to exceed 4.99% of the combined voting power of all of
our securities then outstanding immediately after giving effect to
the exercise, as such percentage ownership is determined in
accordance with the terms of the warrants. However, any holder may
increase or decrease such percentage to any other percentage not in
excess of 9.99% upon at least 61 days’ prior notice from the
holder to us.
Exercise
Price. The exercise price
per share of our common stock purchasable upon the exercise of the
warrants will be equalt to 125% of the per unit public offering
price of the Class A Units, or $1.04 per share, based on an assumed
offering price of $0.83 per Class A Unit (which was the last
reported sale price of our common stock on the Nasdaq Capital
Market on October 11, 2018). The exercise price of the warrants is
subject to appropriate adjustment in the event of certain stock
dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting our common stock and
also upon any distributions of assets, including cash, stock or
other property to our stockholders.
Transferability.
Subject to applicable laws, the warrants may be offered for sale,
sold, transferred or assigned without our
consent.
Exchange
Listing. We do not plan on
applying to list the warrants on the Nasdaq Capital Market, or any
other national securities exchange or any other nationally
recognized trading system.
Fundamental
Transactions. In
the event of a fundamental transaction, as described in the warrants and generally
including any reorganization, recapitalization or reclassification
of our common stock, the sale, transfer or other disposition of all
or substantially all of our properties or assets, our consolidation
or merger with or into another person, the acquisition of more than
50% of our outstanding common stock, or any person or group
becoming the beneficial owner of 50% of the voting power
represented by our outstanding common stock,
within the Company’s control, the Company shall, at the sole
option of the holder of the warrants, purchase the warrants from
the holder at a price equal to the Black Scholes Value (as defined
in the warrant) on the date of the consummation of such fundamental
transaction. However, in the
event of a fundamental transaction not in the Company’s
control,
the holder shall only be entitled to receive the same type of
consideration that is being offered to holders of the
Company’s common stock. In the event of a fundamental transaction, we are
required to cause any successor entity to assume all of our
obligations under the
warrants.
Right as a
Stockholder. Except by virtue
of such holder’s ownership of shares of our common stock, the
holder of a warrant does not have the rights or privileges of a
holder of our common stock, including any voting rights, until the
holder exercises the warrant.
DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth certain information about our
executive officers and directors as of the date of this
prospectus.
|
Name
|
Age
|
Position with the Company
|
|
Since
|
|
Roger Kahn
|
48
|
Director, President and Chief Executive Officer
|
|
2017
|
|
|
|
|
|
|
|
Carole Tyner (1)
|
55
|
Chief Financial Officer and Treasurer
|
|
2018
|
|
|
|
|
|
|
|
Joni Kahn*
|
62
|
Chairperson of the Board, Chair of the Compensation Committee and
Member of the Audit and Nominating and Corporate Governance
Committees
|
|
2012
|
|
|
|
|
|
|
|
Kenneth Galaznik*
|
66
|
Director, Chair of the Audit Committee and Member of the
Compensation Committee
|
|
2006
|
|
|
|
|
|
|
|
Scott Landers*
|
47
|
Director, Chair of Nominating and Corporate Governance Committee
and Member of the Audit and Compensation Committees
|
|
2010
|
|
|
|
|
|
|
|
Michael Taglich
|
52
|
Director
|
|
2013
|
*Independent director as defined under the rules of the Nasdaq
Stock Market.
(1)
Ms.
Tyner was appointed as our Chief Financial Officer and Treasurer
effective September 28, 2018, following the resignation of our
former Chief Financial Officer, Michael Prinn.
Roger Kahn was elected to
the Board of Directors in December 2017. Mr. Kahn joined the
Company as the Chief Operating Officer in August 2015 and has been
our President and Chief Executive Officer since May 2016. Prior to
joining Bridgeline Digital, Mr. Kahn co-founded FatWire, a leading
content management and digital engagement company. 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. Mr. Kahn received his Ph.D. in
Computer Science and Artificial Intelligence from the University of
Chicago.
Mr. 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.
Carole Tyner was appointed as
the Company’s Chief Financial Officer and Treasurer effective
September 28, 2018. Ms. Tyner has over
twenty-five years of financial management experience in public and
private companies and has served as the Company’s Vice
President of Finance since January 2014. From 2012 to 2014, Ms.
Tyner was the Vice President of Finance for Kalido Inc (N/K/A
Magnitude Software), a global developer of enterprise information
management software. Ms. Tyner graduated from the Suffolk
University Sawyer School of Management with a Bachelor of Science
degree in Accounting.
Joni Kahn has been a
member of our Board of Directors since April 2012. In May 2015, Ms.
Kahn was appointed Chairperson of the Board of Directors. She also
serves as the Chair of the Compensation Committee and is a member
of the Audit and Nominating and Governance Committees. Ms. Kahn has
over thirty years of operating experience with high growth software
and services companies with specific expertise in the SaaS
(Software as a Service), ERP (Enterprise Resource Planning)
Applications, Business Intelligence and Analytics and CyberSecurity
segments. From 2013 to 2015, Ms. Kahn was the Senior Vice President
of Global Services for Big Machines, Inc., which was acquired by
Oracle in October 2013. From 2007 to 2012, Ms. Kahn was Vice
President of Services for HP’s Enterprise Security Software
group. From 2005 to 2007, Ms. Kahn was the Executive Vice President
at BearingPoint where she managed a team of over 3,000
professionals and was responsible for North American delivery of
enterprise applications, systems integration and managed services
solutions. Ms. Kahn also oversaw global development centers in
India, China and the U.S. 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. Business Objects was
acquired by SAP in 2007. From 2000 to 2007, Ms. Kahn was a Member
of the Board of Directors for MapInfo, a global location
intelligence solutions company. She was a member of MapInfo’s
Audit Committee and the Compensation Committee. MapInfo was
acquired by Pitney Bowes in 2007. From 1993 to 2000, Ms. Kahn
was an Executive Vice President and Partner of KPMG Consulting,
where she helped grow the firm’s consulting business from
$700 million to $2.5 billion. Ms. Kahn received her B.B.A in
Accounting from the University of Wisconsin –
Madison.
Ms. Kahn brings extensive leadership experience to our Board and
our Audit Committee as an experienced senior executive. Ms. 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.
Kenneth Galaznik has been
a member of our Board of Directors since 2006. Mr. Galaznik is the
Chairman of the Company’s Audit Committee and serves as a
member of the Compensation Committee. From 2005 to 2016, Mr.
Galaznik was the Senior Vice President, Chief Financial Officer and
Treasurer of American Science and Engineering, Inc., a publicly
held supplier of X-ray inspection and screening systems with a
public market cap of over $200 million. Mr. Galaznik retired from
his position at American Science and Engineering on March 31, 2016.
From August 2002 to February 2005, Mr. Galaznik was Vice President
of Finance of American Science and Engineering, Inc. From November
2001 to August 2002, Mr. Galaznik was self-employed as a
consultant. From March 1999 to September 2001, he served as Vice
President of Finance at Spectro Analytical Instruments, Inc. and
has more than 35 years of experience in accounting and finance
positions. Mr. Galaznik holds a B.B.A. degree in accounting from
The University of Houston.
Mr. 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.
Scott Landers has been a
member of our Board of Directors since 2010. Mr. Landers is the
Chair of the Nominating and Corporate Governance Committee and
serves as a member of the Audit and Compensation Committees. Mr.
Landers was named President and Chief Executive Officer of Monotype
Imaging Holdings, Inc. 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.
Prior to joining Monotype, from September 2007 until July 2008, Mr.
Landers was the Vice President of Global Finance at Pitney Bowes
Software, a $450 million division of Pitney Bowes, a leading global
provider of location intelligence solutions. From 1997 until
September 2007, Mr. Landers held several senior finance positions,
including Vice President of Finance and Administration, at MapInfo,
a publicly-held company which was acquired by Pitney Bowes in April
2007. Earlier in his career, Mr. Landers was a Business
Assurance Manager with Coopers & Lybrand. Mr. Landers holds a
Bachelor’s degree in accounting from Le Moyne College in
Syracuse, N.Y. and a Master’s degree in business
administration from The College of Saint Rose in Albany,
N.Y.
Mr. 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.
Michael Taglich has been a
member of our Board of Directors since 2013. He is the Chairman and
President of Taglich Brothers, Inc., a New York City based
securities firm which he co-founded in 1992 with his brother Robert
Taglich. Taglich Brothers, Inc. 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. Mr. Taglich holds
a Bachelor’s degree in business from the New York University
Stern School of Business.
Michael Taglich brings extensive professional experience which
spans various aspects of senior management, including finance,
operations and strategic planning. Mr. Taglich has more than 30
years of financial industry experience, and served on his first
public company board over 20 years ago.
There are no family relationships between any of the directors and
the Company’s executive officers, including between Ms. Joni
Kahn and Mr. Roger Kahn, the Company’s President and Chief
Executive Officer.
EXECUTIVE COMPENSATION
Summary Compensation Table
The
following Summary Compensation Table sets forth the total
compensation paid or accrued for the fiscal years ended September
30, 2018 and September 30, 2017 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,
2018. We refer to these officers as our named executive
officers.
|
Name and
Principal Position
|
|
Fiscal
Year End
|
Salary
|
Bonus (1)
|
Option
Awards
|
All Other
Compensation (2)
|
Total
|
|
|
|
|
|
|
|
|
|
|
Roger Kahn
|
|
2018
|
$ 300,000
|
$ 67,497
|
$ -
|
$ -
|
$ 367,497
|
|
President and
Chief
|
|
|
|
|
|
|
|
|
Executive
Officer
|
|
2017
|
$ 300,000
|
$ 20,000
|
$ -
|
$ 14,037
|
$ 334,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Prinn (3)
|
|
2018
|
$ 250,000
|
$ 40,498
|
$ -
|
$ -
|
$ 290,498
|
|
Former Executive
Vice President
|
|
|
|
|
|
|
|
|
and Chief Financial
Officer
|
|
2017
|
$ 250,000
|
$ 12,000
|
$ -
|
$ -
|
$ 262,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carole Tyner (3)
|
|
2018
|
$ 186,750
|
$ 5,933
|
$ -
|
$ -
|
$ 192,683
|
|
Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
2017
|
$ 181,500
|
$ 14,250
|
$ -
|
$ -
|
$ 195,750
|
|
|
(1)
|
Mr.
Kahn elected to receive common stock in lieu of a $20,000 cash
payment for a bonus earned for the first half of the fiscal
year ended 2017. He received 7,273 fully vested restricted
shares of common stock with a fair value price per share of
$2.75.
|
|
|
(2)
|
Amounts
paid to Mr. Kahn in fiscal 2017 represent reimbursement for living
expenses per Mr. Kahn’s Employment Agreement. (See section
entitled “Employment
Agreements – Roger Kahn”
below.)
|
|
|
(3)
|
Mr.
Prinn resigned as our Executive Vice President, Chief Financial
Officer and Treasurer effective September 25, 2018. Effective
September 28, 2018, Carole Tyner was appointed as our Chief
Financial Officer and Treasurer.
|
Employment Agreements
Roger Kahn
We have entered into an employment agreement with
Roger Kahn, our President and Chief Executive Officer, to provide
executive management services. The employment agreement had an
initial term of thirteen months beginning August 24, 2015 and
terminating on September 30, 2016. The employment agreement was
amended on May 1, 2016 (“First
Amendment”) to extend
through September 30, 2017 and then extended again through
September 30, 2018. The First Amendment included a reimbursement
for living expenses directly related to accommodations and
utilities for an apartment near the Company’s corporate
headquarters in an amount not to exceed $2,900 per month. The
employment agreement renews for successive periods of one year if
the Company provides written notice of renewal not less than 60
days prior to the end of the initial term or any applicable
succeeding term. The employment agreement may be terminated by (i)
us, in the event of Mr. Kahn’s death, resignation, retirement
or disability, or for or without cause, or (ii) Mr. Kahn for good
reason. In the event that we terminate Mr. Kahn without cause or
Mr. Kahn resigns for good reason, he is entitled to receive
severance payments equal to twelve months of salary and one full
quarterly bonus. In addition, any stock option awards that are not
exercisable will be immediately vested and
exercisable.
Michael Prinn
We
entered into an employment agreement with Michael Prinn, our former
Executive Vice President and Chief Financial Officer, to provide
executive management services. Mr. Prinn’s employment
agreement was effective for the period of twelve months commencing
October 1, 2017 through September 30, 2018. The employment
agreement could be terminated by (i) us, in the event of Mr.
Prinn’s death, resignation, retirement or disability, or for
or without cause, or (ii) Mr. Prinn for good reason. Pursuant to
the terms of the agreement, in the event that we terminate Mr.
Prinn without cause or Mr. Prinn resigns for good reason, he is
entitled to receive severance payments equal to twelve months of
salary and bonus. In addition, any stock option awards that are not
exercisable will be immediately vested and
exercisable.
Effective
September 25, 2018, Mr. Prinn resigned from his position as our
Executive Vice President, Chief Financial Officer and Treasurer,
thereby terminating his employment agreement. However, Mr. Prinn
agreed to continue to provide services to the Company as an
employee until October 17, 2018.
Outstanding Equity Awards at Fiscal 2018 Year End
The
following table sets forth information concerning outstanding stock
options for each named executive officer as of September 30,
2018.
|
Name
|
|
Grant
Date
|
Number
of Securities Underlying
Unexercised
Options Exercisable
(1)
|
Number
of Securities
Underlying
Unexercised
Options
Unexercisable
(1)
|
Exercise
price
($/sh)
|
Option
Expiration
Date
|
|
Roger Kahn
(1)
|
|
08/24/2015
|
51,382
|
24,390
|
$ 5.75
|
08/24/2025
|
|
|
|
08/19/2016
|
136,777
|
49,689
|
$ 4.10
|
08/19/2026
|
|
|
|
188,159
|
74,079
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Prinn
(1)
|
|
10/28/2011(2)
|
2,400
|
-
|
$ 16.75
|
10/28/2021
|
|
|
|
11/29/2011
|
2,000
|
-
|
$ 16.25
|
11/29/2021
|
|
|
|
10/19/2012
|
3,000
|
-
|
$ 41.00
|
10/19/2022
|
|
|
|
12/09/2013
|
3,000
|
-
|
$ 28.00
|
12/09/2023
|
|
|
|
12/09/2015
|
10,000
|
5,000
|
$ 5.90
|
12/09/2025
|
|
|
|
08/19/2016
|
14,667
|
7,333
|
$ 4.10
|
08/19/2026
|
|
|
|
35,067
|
12,333
|
|
|
|
|
|
|
|
|
|
|
|
|
Carole
Tyner
|
|
01/28/2014
|
2,000
|
-
|
$ 33.25
|
01/28/2024
|
|
|
|
02/09/2105
|
400
|
-
|
$ 13.25
|
02/09/2025
|
|
|
|
08/19/2016
|
1,334
|
666
|
$ 4.10
|
08/19/2026
|
|
|
|
3,734
|
666
|
|
|
|
__________________
|
(1)
|
Shares
vest in equal installments upon the anniversary date of the grant
over three years.
|
|
(2)
|
Stock
option awards granted as part of October 28, 2011 repricing
program, offered employees the opportunity to exchange and forfeit
options previously granted for new options grants of the same
amount with (i) a grant exercise price of $16.75, the fair market
value on October 28, 2011, and (ii) a new three-year vesting
schedule beginning October 28, 2011. Mr. Prinn exchanged 2,400
previously granted options for a new grant with an incremental
grant date fair value of $6,600.
|
COMPENSATION OF
DIRECTORS
The non-employee members of our Board of Directors are compensated
as follows:
●
Option Grants. Unless otherwise
determined by our Board of Directors, non-employee directors each
receive annual grants of options to purchase 2,000 shares of our
common stock at an exercise price equal to the fair market value of
the shares on the date of grant. The options vest over three years
in equal installments on the anniversary of grant. New directors
receive options to purchase 5,000 shares of our common stock at the
then current fair market value upon election to the Board. During
the fiscal year ended September 30, 2018, outside directors each
received stock options to purchase 2,000 shares of common
stock.
●
.
Compensation. Each outside director
receives an annual retainer of $12,000 and is compensated $1,500
for each meeting such director attends in person. Members of the
Audit Committee receive additional annual compensation of
$3,000.
●
Committee Chair Bonus. The Chair of our
Audit Committee receives an additional annual fee of $10,000. The
Chairs of our Compensation Committee and Nominating and Corporate
Governance Committee each receive an additional annual fee of
$5,000. These fees are payable in lump sums in advance. Other
directors who serve on our standing committees, other than the
Audit Committee, do not receive additional compensation for their
committee services.
Director Compensation Table
The
following table sets forth information concerning the compensation
paid to our non-employee directors during the fiscal year ended
September 30, 2018.
|
Name
|
Fees
Earned or Paid
in Cash and Stock
(1)
|
Option
Awards
(2)(3)
|
All
Other Compensation
|
Total
|
|
Joni
Kahn
|
$ 26,000
|
$ 3,344
|
—
|
$ 29,344
|
|
Kenneth
Galaznik
|
$ 28,000
|
$ 3,344
|
—
|
$ 31,344
|
|
Scott
Landers
|
$ 26,000
|
$ 3,344
|
—
|
$ 29,344
|
|
Michael
Taglich
|
$ 18,000
|
$ 3,344
|
—
|
$ 21,344
|
(1)
In lieu of cash
payment for board services, our non-employee directors were issued
shares of restricted common stock, which vested on September 30,
2018.
During fiscal 2018,
a total of 41,006 shares of restricted common stock were issued
with a fair market value at the date of grant of $2.39 per share,
as follows:
|
Name
|
Common
Stock Shares
Issued
|
Fair
Market Value
|
|
Joni
Kahn
|
10,879
|
$ 26,000
|
|
Kenneth
Galaznik
|
11,716
|
$ 28,000
|
|
Scott
Landers
|
10,879
|
$ 26,000
|
|
Michael
Taglich
|
7,532
|
$ 18,000
|
|
Total
|
41,006
|
$ 98,000
|
(2)
Represents
aggregate grant date fair value of the entire stock option awards
for the fiscal year ended September 30, 2018 in accordance with
Financial Accounting Standards Board Accounting Standards
Codification Topic 718 (“ASC
718 ”), excluding the estimated impact of forfeitures
of stock option grants. None of the stock option awards listed
above were exercised in the fiscal year ended September 30, 2018,
and the amounts set forth above do not represent amounts actually
received by the directors.
(3)
The following table
sets forth the following aggregate number of shares under
outstanding stock options plans held by our non-employee directors
as of September 30, 2018:
|
Name
|
Number
of Shares Underlying
Outstanding
Stock Options
|
|
Joni
Kahn
|
8,200
|
|
Kenneth
Galaznik
|
10,800
|
|
Scott
Landers
|
9,600
|
|
Michael
Taglich(a)
|
10,400
|
(a)
In consideration for a loan to us of $250,000,
Michael Taglich received 3,000 options to purchase our common stock
on November 20, 2015 at a price of $6.05 per share. The fair value
of the options at the time of grant was $4.15 per share. The shares
vest in equal installments upon the anniversary date of the grant
over three years.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Item
404(d) of Regulation S-K requires the Company to disclose any
transaction or proposed transaction which occurred since the
beginning of the two most recently completed fiscal years in which
the amount involved exceeds the lesser of $120,000 or 1% of the
average of the Company’s total assets as of the end of the
last two completed fiscal years in which the Company is a
participant and in which any related person has or will have a
direct or indirect material interest. A related person is any
executive officer, director, nominee for director, or holder of 5%
or more of the Company’s common stock, or an immediate family
member of any of those persons.
In
accordance with our Audit Committee charter, our Audit Committee is
responsible for reviewing and approving the terms of any related
party transactions. Therefore, any material financial transaction
between the Company and any related person would need to be
approved by our Audit Committee prior to the Company entering into
such transaction.
In
October 2013, Michael Taglich joined the Board of Directors.
Michael Taglich is the Chairman and President of Taglich Brothers,
Inc., a New York based securities firm. Taglich Brothers, Inc. was
the placement agent for many of the Company’s private
offerings in 2012, 2013, 2014, and 2016. It was also the placement
agent for the Company’s $3.0 million subordinated debt
offering in 2013 and the Series A Preferred stock sale in 2015. As
of October 11, 2018, Michael Taglich beneficially owns
approximately 21.8% of the Company’s common stock. Michael
Taglich has also guaranteed $1.5 million in connection with the
Company’s out of formula borrowings on its credit facility
with Heritage Bank.
In
consideration of previous loans by Michael Taglich and a personal
guaranty delivered by Michael Taglich to BridgeBank, N.A. for the
benefit of the
Company on December 19, 2014 (the “Guaranty”), on January 7, 2015
the Company issued Michael Taglich a warrant to purchase 12,000
shares of common stock of the Company at a price equal to $20.00
per share. On January 7, 2015, the
Company also entered into a side letter with Michael Taglich
pursuant to which the
Company agreed in the event the Guaranty remains outstanding
for a period of more than 12 months, on each anniversary of the
date of issuance of the Guaranty while the Guaranty remains
outstanding the
Company will issue Michael Taglich a warrant to purchase
6,000 shares of common stock, which warrant shall contain the same
terms as the warrant issued to Michael Taglich on January 7, 2015.
Since the Guaranty did remain outstanding for a period of more than
12 months, a warrant to purchase 6,000 shares of common stock was
issued to Michael Taglich in February 2016 at a price of $20.00 and
a warrant to purchase 6,000 shares of common stock was issued in
January 2017 at a price of $20.00.
Mr.
Taglich was also issued warrants in fiscal 2015 in connection with
shareholder term notes issued to him. The notes were subsequently
converted to shares of common stock in May 2016. He was issued
three warrants totaling 36,000 shares at an exercise price of
$20.00 per share and one warrant for 32,000 shares at an exercise
price of $8.75 per share in connection with these notes. The
warrants have a term of five years and are exercisable six months
after the date of issuance. A fair market value of $270 was
assigned to the warrants and recorded as a debt discount in current
liabilities with the offsetting amount recorded to additional paid
in capital in the Consolidated Balance Sheet. The fair market
value of the warrants was amortized on a straight-line basis over
their expected life. However, when the Company converted these term
notes in May 2016, the remaining unamortized value was recorded as
amortization expense. Total amortization expense of $158 was
recorded in fiscal 2016 related to the warrants.
Robert
Taglich was appointed to the Company’s Board of Directors in
May 2016. Robert Taglich is the brother of Michael Taglich and is
the Co-founder and Senior Director of Taglich Brothers, Inc. Mr.
Taglich was a consultant to the Company prior to his appointment to
the Board of Directors. As compensation for his consulting
services, Robert Taglich was granted options to purchase 3,000
shares of the Company’s common stock at a price of $6.05 per
share. As a director, Mr. Taglich was granted options to purchase
2,200 shares of common stock, and 6,954 shares of restricted common
stock. Mr. Taglich did not seek re-election to the Board of
Directors and his tenure expired on June 29, 2017.
In
connection with the equity conversion of the $3.0 million in term
notes from shareholders that was completed in May 2016, Taglich
Brothers, Inc. was granted placement agent warrants to purchase
86,778 shares of common stock at a price of $3.65 per share.
Included in the distribution were warrants to purchase 35,120
shares of common stock to Michael Taglich and warrants to purchase
28,552 shares of common stock to Robert Taglich. The warrants
expire in five years.
In
connection with the private offering in July 2016, Taglich
Brothers, Inc was granted placement agent warrants to purchase
44,000 shares of common stock at a price of $4.60 per share.
Included in the distribution were 8,864 warrants to Michael Taglich
and 7,236 warrants to Robert Taglich. The warrants expire in five
years.
In
connection with the private offering in November 2016, the Company
issued to the purchasers warrants to purchase a total of
213,538 shares common stock. Each warrant expires five and
one-half years from the date of issuance and is exercisable for
$3.50 per share beginning six months from the date of issuance, or
May 9, 2017. The warrants expire May 9, 2022.
Warrants to
purchase 8,600 shares of common stock and 15,385 shares of common
stock were issued to Michael Taglich and Robert Taglich,
respectively, in connection with the private offering.
On
September 7, 2018, both Michael Taglich and Robert Taglich each
purchased Term Notes in the amount of approximately
$121,618. The Company intends
to repay these Term Notes, along with all accrued interest, which
amounted to approximately $1,240 per Term Note held by
each Michael Taglich and Robert Taglich as of October
11, 2018, out of the proceeds of this
offering.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
ownership is determined in accordance with Rule 13d-3 under the
Exchange Act. 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 October
11, 2018 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, 80 Blanchard Road,
Burlington, Massachusetts 01803.
The following tables set forth, as of October 11,
2018, the beneficial ownership of our Series A 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 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 October
11, 2018 there were 262,354 shares of Series A
Preferred and 4,241,255 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
|
Name
and Address (1)
|
Number
of
Shares
Owned
(2)
|
Percent
of Shares
Outstanding
|
|
Robert
Taglich
790 New York
Avenue
Huntington, NY
11743
|
65,993
|
25.15%
|
|
Alvin Fund,
LLC
215 West
98th
Street, Apt. 10A
New York, NY
10025
|
22,446
|
8.56%
|
|
Shadow Capital,
LLC
3601 SW
29th
Street
Topeka, KS
66614
|
21,128
|
8.05%
|
|
Sterling Family
Investment, LLC
12400 Dutch Forest
PL
Edmond, OK
73013
|
21,128
|
8.05%
|
(1)
Each of our
officers and directors are excluded from this table, as no officer
or director currently holds shares of Series A
Preferred.
(2)
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 0.62 shares of our common
stock.
Common
Stock
|
Name
and Address
|
Number
of
Shares
Owned
|
Percent
of Shares
Outstanding
|
|
Michael Taglich,
Director
|
951,267(1)
|
21.78%
|
|
Roger Kahn,
President, Chief Executive Officer and Director
|
345,283(2)
|
7.78%
|
|
Michael Prinn,
Former Executive Vice President and Chief Financial Officer
(3)
|
36,997(4)
|
*
|
|
Carole Tyner, Chief
Financial Officer and Treasurer (3)
|
3,734(5)
|
*
|
|
Kenneth Galaznik,
Director
|
37,418(6)
|
*
|
|
Scott Landers,
Director
|
34,359(7)
|
*
|
|
Joni Kahn,
Director
|
33,223(8)
|
*
|
|
All executive
officers and directors as a group (7 persons)
|
1,442,282
|
31.20%
|
*less than
1%
(1)
Includes 119,419
shares issuable upon the exercise of warrants, and 7,200 shares of
common stock subject to currently exercisable options (includes
options that will become exercisable within 60 days of October
11, 2018). Also includes 1,739 shares of common stock
and 120 shares issuable upon the exercise of warrants owned by Mr.
Taglich’s spouse.
(2)
Includes 8,600
shares issuable upon the exercise of warrants and 188,159 shares of
common stock subject to currently exercisable options (includes
options that will become exercisable within 60 days of October
11, 2018). Includes 27,236 shares of common stock
owned by Mr. Kahn’s spouse.
(3)
As noted above, Mr.
Prinn resigned as our Executive Vice President, Chief Financial
Officer and Treasurer effective September 25, 2018. Effective
September 28, 2018, Carole Tyner was appointed as our Chief
Financial Officer and Treasurer.
(4)
Includes
35,067 shares of common stock subject to currently exercisable
options (includes options that will become exercisable within 60
days of October 11, 2018).
(5)
Includes 3,734
shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of
October 11, 2018).
(6)
Includes 7,600
shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of
October 11, 2018).
(7)
Includes 6,400
shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of
October 11, 2018). Includes 400 shares of common stock
owned by Mr. Landers’ children.
(8)
Includes 5,000
shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of
October 11, 2018).
UNDERWRITING
ThinkEquity, a
division of Fordham Financial Management, Inc., is acting as the
representative of the underwriters of this offering (the
“Representative”). We have entered
into an underwriting agreement
dated ,
2018 with the Representative. Subject to the terms and conditions
of the underwriting agreement, we have agreed to sell to each
underwriter named below and each underwriter named below has
severally and not jointly agreed to purchase from us, at the public
offering price per share less the underwriting discounts set forth
on the cover page of this prospectus, the number of
Units listed next to its name in the following
table:
|
Underwriters
|
Number
of
Class A Units
|
Number of
Class B Units
|
|
ThinkEquity, a
division of Fordham Financial Management, Inc.
|
|
|
|
Total:
|
|
|
The
underwriters are committed to purchase all the Units offered by us
other than those covered by the over-allotment option to purchase
additional shares and/or warrants described below, if they purchase
any Units. The obligations of the underwriters may be terminated
upon the occurrence of certain events specified in the underwriting
agreement. Furthermore, pursuant to the underwriting agreement, the
underwriters’ obligations are subject to customary
conditions, representations and warranties contained in the
underwriting agreement, such as receipt by the underwriters of
officers’ certificates and legal
opinions.
We
have agreed to indemnify the underwriters against specified
liabilities, including liabilities under the Securities Act, and to
contribute to payments the underwriters may be required to make in
respect thereof.
The
underwriters are offering the Units, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of
legal matters by their counsel and other conditions specified in
the underwriting agreement. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject
orders in whole or in part.
Over-Allotment
Option
We have granted to
the Representative of the underwriters an option, exercisable no
later than 45 calendar days after the date of this prospectus, to
purchase up to 1,129,518 additional shares of common stock
(15% of the
shares of common stock included in the Class A Units and
Class B Units sold in this offering, on
an as-converted to common stock basis with respect to any
Series B Preferred sold) and/or warrants to purchase
1,129,518 shares of common stock
(15% of the warrants included as part of the Units sold in this
offering) from us to cover over-allotments, if any, at a
price per share equal to the public offering price of the Class A
Units, less the underwriting discounts and commissions, and a price
of $0.01 per warrant. The underwriters may exercise this option
only to cover over-allotments made in connection with this
offering. If the underwriters exercise this option in whole or in
part, then the underwriters will be severally committed, subject to
the conditions described in the underwriting agreement, to purchase
these additional securities. If any additional securities are
purchased, the underwriters will offer the additional securities on
the same terms as those on which the securities are being offered
hereby. If
this option is exercised in full, the total price to the public
will be
$
and the total net proceeds, before expenses, to us will be
$ .
Discounts
and Commissions
The Representative has advised us that the underwriters propose to
offer the securities to the public at the public
offering price per Unit set forth on the cover page of
this prospectus. The underwriters may offer the securities
to securities dealers at that price less a concession of not
more than $ per
Unit, of which up to
$ per
Unit may be re-allowed to other
dealers.
The following table
summarizes the public offering price, underwriting discounts and
commissions and proceeds before expenses to us assuming both no
exercise and full exercise by the underwriters of their
over-allotment option:
|
|
Per
Class A
Unit
|
Per
Class B
Unit
|
Total
Without
Over-Allotment
Option
|
Total
With
Over-Allotment
Option
|
|
Public offering
price
|
$
|
$
|
$
|
$
|
|
Underwriting
discounts and commissions (7%)
|
$
|
$
|
$
|
$
|
|
Non-accountable
expense allowance (1%)(1)
|
$
|
$
|
$
|
$
|
|
Proceeds, before
expenses, to us
|
$
|
$
|
$
|
$
|
____________________
(1)
We have agreed to
pay a non-accountable expense allowance to the Representative equal
to 1.0% of the gross proceeds received in this
offering
We have paid an expense deposit of $20,000 to the Representative,
which will be applied against the out-of-pocket accountable
expenses that will be paid by us to the underwriters in connection
with this offering, and will be reimbursed to us to the extent not
incurred.
In addition, we
have also agreed to reimburse the Representative for all reasonable
out-of-pocket accountable fees and costs incurred in connection
with this offering; provided that in no event shall we be obligated
to reimburse the Representative more than $90,000 in the aggregate
for such fees, expenses and costs, which may include: (a) fees and
expenses of counsel to the underwriters; (b) all filing fees and
communication expenses relating to the registration of the
securities to be sold in this offering with the SEC;
(c) all filing fees and expenses associated with the review of this
offering by FINRA and the Nasdaq Stock Market; and (d) any other
reasonable out-of-pocket accountable expenses incurred by the
Representative in connection with the performance of its services
in this offering.
We estimate the
expenses of this offering payable by us, not including underwriting
discounts and commissions, will be approximately
$251,916.
Discretionary
Accounts
The underwriters do
not intend to confirm sales of the securities offered hereby to any
accounts over which they have discretionary authority.
Representative’s
Warrants
Upon closing of
this offering, we have agreed to issue to the Representative, as
compensation, warrants to purchase a number of shares of common
stock equal to 5% of the aggregate number of shares of common stock
sold as part of the Class A Units and shares of our common
stock into which the shares of Series B Preferred sold
as part of the Class B Units are convertible, excluding the
over-allotment (the “Representative’s
Warrants”). The Representative’s Warrants will
be exercisable at a per share exercise price equal to the greater
of (i) 125% of the public offering price per Class A
Unit in this offering and (ii) the closing price of our
common stock on the closing date of this offering, as reported by
the Nasdaq Capital Market. The Representative’s Warrants are
exercisable at any time and from time to time, in whole or in part,
commencing on the date that is 180 days following the effective
date of the registration statement of which this prospectus is a
part and expiring on the date that is five years following the
effective date of the registration statement.
The
Representative’s Warrants have been deemed compensation by
FINRA and are therefore subject to a 180-day lock-up pursuant to
Rule 5110(g)(1) of FINRA. The Representative (or permitted
assignees under Rule 5110(g)(1)) will not sell, transfer, assign,
pledge, or hypothecate these warrants or the securities underlying
these warrants, nor will they engage in any hedging, short sale,
derivative, put, or call transaction that would result in the
effective economic disposition of the warrants or the underlying
securities for a period of 180 days from the effective date of this
registration statement. In addition, the warrants provide for
registration rights upon request, in certain cases. The demand
registration right provided will not be greater than five years
from the effective date of this registration statement in
compliance with FINRA Rule 5110(f)(2)(G)(iv). The piggyback
registration right provided will not be greater than seven years
from the effective date of this registration statement in
compliance with FINRA Rule 5110(f)(2)(G)(v). We will bear all fees
and expenses attendant to registering the securities issuable on
exercise of the warrants other than underwriting commissions
incurred and payable by the holders. The exercise price and number
of shares issuable upon exercise of the warrants may be adjusted in
certain circumstances including in the event of a stock dividend or
our recapitalization, reorganization, merger or consolidation.
However, the warrant exercise price or underlying shares will not
be adjusted for issuances of shares of common stock at a price
below the warrant exercise price.
Right
of First Refusal
Until six (6)
months after the closing date of this offering, the Representative
will have, subject to certain exceptions, an irrevocable right of
first refusal to act as sole investment banker, sole book-runner
and/or sole placement agent, at the Representative’s
discretion, for each and every future public equity offering for
us, or any successor to or any subsidiary of us, on terms customary
for the Representative. The Representative will have the sole right
to determine whether or not any other broker-dealer shall have the
right to participate in any such offering and the economic terms of
any such participation. The Representative will not have more than
one opportunity to waive or terminate the right of first refusal in
consideration of any payment or fee.
Other
The underwriters
and their affiliates may in the future provide various investment
banking and other financial services for us, for which they may
receive, in the future, customary fees.
Lock-Up
Agreements
Pursuant to
“lock-up” agreements, we and our executive officers,
directors and greater than 5% stockholders, have agreed, subject to
limited exceptions, without the prior written consent of the
Representative not to directly or indirectly, offer to sell, sell,
pledge or otherwise transfer or dispose of any of shares of (or
enter into any transaction or device that is designed to, or could
be expected to, result in the transfer or disposition by any person
at any time in the future of) our common stock, enter into any swap
or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of
ownership of shares of our common stock, make any demand for or
exercise any right or cause to be filed a registration statement,
including any amendments thereto, with respect to the registration
of any shares of common stock or securities convertible into or
exercisable or exchangeable for common stock or any of our other
securities or publicly disclose the intention to do any of the
foregoing, subject to customary exceptions, for a period of 90 days
from the date of this prospectus.
Listing
Our common stock is
listed on the Nasdaq Capital Market under the symbol
“BLIN.”
Stabilization
In connection with
this offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate-covering
transactions, penalty bids and purchases to cover positions created
by short sales.
Stabilizing
transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum, and are engaged in for the purpose of preventing
or retarding a decline in the market price of the underlying
security while the offering is in progress.
Over-allotment
transactions involve sales by the underwriters of
securities in excess of the number of
securities the underwriters are obligated to purchase.
This creates a syndicate short position which may be either a
covered short position or a naked short position. In a covered
short position, the number of securities
over-allotted by the underwriters is not greater than the number of
securities
that they may purchase in the over-allotment option. In a naked
short position, the number of securities
involved is greater than the number of securities
in the over-allotment option. The underwriters may close out any
short position by exercising their over-allotment option and/or
purchasing securities
in the open market.
Syndicate covering
transactions involve purchases of securities
in the open market after the distribution has been completed in
order to cover syndicate short positions. In determining the source
of securities
to close out the short position, the underwriters will consider,
among other things, the price of securities
available for purchase in the open market as compared with the
price at which they may purchase securities
through exercise of the over-allotment option. If the underwriters
sell more securities
than could be covered by exercise of the over-allotment option and,
therefore, have a naked short position, the position can be closed
out only by buying securities
in the open market. A naked short position is more likely to be
created if the underwriters are concerned that after pricing there
could be downward pressure on the price of the securities
in the open market that could adversely affect investors who
purchase in the offering.
Penalty bids permit
the representative to reclaim a selling concession from a syndicate
member when the securities
originally sold by that syndicate member are purchased in
stabilizing or syndicate covering transactions to cover syndicate
short positions.
These stabilizing
transactions, syndicate covering transactions and penalty bids may
have the effect of raising or maintaining the market price of our
securities
or preventing or retarding a decline in the market price of our
securities.
As a result, the price of our common stock in the open market may
be higher than it would otherwise be in the absence of these
transactions. Neither we nor the underwriters make any
representation or prediction as to the effect that the transactions
described above may have on the price of our common stock. These
transactions may be effected in the over-the-counter market or
otherwise and, if commenced, may be discontinued at any
time.
Passive
Market Making
In connection with
this offering, underwriters and selling group members may engage in
passive market making transactions in our common stock on the
Nasdaq Capital Market in accordance with Rule 103 of Regulation M
under the Exchange Act, during a period before the commencement of
offers or sales of the shares and extending through the completion
of the distribution. A passive market maker must display its bid at
a price not in excess of the highest independent bid of that
security. However, if all independent bids are lowered below the
passive market maker’s bid, then that bid must then be
lowered when specified purchase limits are exceeded.
Indemnification
We have agreed to
indemnify the underwriters against liabilities relating to this
offering arising under the Securities Act and the Exchange Act,
liabilities arising from breaches of some or all of the
representations and warranties contained in the underwriting
agreement, and to contribute to payments that the underwriters may
be required to make for these liabilities.
Electronic
Distribution
This
prospectus in electronic format may be made available on websites
or through other online services maintained by one or more of the
underwriters, or by their affiliates. Other than this
prospectus in electronic format, the information on any
underwriter’s website and any information contained in any
other website maintained by an underwriter is not part of this
prospectus or the registration statement of which this prospectus
forms a part, has not been approved and/or endorsed by us or any
underwriter in its capacity as underwriter, and should not be
relied upon by investors.
Selling
Restrictions Outside the United States
No action has been
taken in any jurisdiction (except in the United States) that would
permit a public offering of our common stock, or the possession,
circulation or distribution of this prospectus or any other
material relating to us or our common stock in any jurisdiction
where action for that purpose is required. Accordingly, our common
stock may not be offered or sold, directly or indirectly, and none
of this prospectus or any other offering material or advertisements
in connection with our common stock may be distributed or
published, in or from any country or jurisdiction, except in
compliance with any applicable rules and regulations of any such
country or jurisdiction.
European Economic Area
In relation to each
Member State of the European Economic Area which has implemented
the Prospectus Directive, each a “Relevant Member
State,” with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State,
or the “Relevant Implementation Date,” our securities
will not be offered to the public in that Relevant Member State
prior to the publication of a prospectus in relation to our
securities that has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the
Prospectus Directive, except that, with effect from and including
the Relevant
Implementation
Date, an offer of our securities may be made to the public in that
Relevant Member State at any time:
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to any legal entity
that is a qualified investor as defined in the Prospectus
Directive;
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to fewer than 100
or, if the Relevant Member State has implemented the relevant
provision of the 2010 PD Amending Directive, 150 natural or legal
persons (other than qualified investors as defined in the
Prospectus Directive), as permitted under the Prospectus Directive,
subject to obtaining the prior consent of the manager for any such
offer; or
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in any other
circumstances which do not require the publication by the issuer of
a prospectus pursuant to Article 3(2) of the Prospectus Directive,
provided that no such offer of the securities shall require the
issuer or any underwriter to publish a prospectus pursuant to
Article 3 of the Prospectus Directive.
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For the purposes of
this provision, the expression an “offer of securities to the
public” in relation to any securities in any Relevant Member
State means the communication in any form and by any means of
sufficient information on the terms of the offer and securities to
be offered so as to enable an investor to decide to purchase or
subscribe securities, as the same may be varied in that Relevant
Member State by any measure implementing the Prospectus Directive
in that Relevant Member State and the expression “Prospectus
Directive” means Directive 2003/71/EC (and amendments
thereto, including the 2010 PD Amending Directive, to the extent
implemented in the Relevant Member State), and includes any
relevant implementing measure in each Relevant Member State and the
expression “2010 PD Amending Directive” means Directive
2010/73/EU.
United Kingdom
In the United
Kingdom, this document is being distributed only to, and is
directed only at, and any offer subsequently made may only be
directed at persons who are “qualified investors” (as
defined in the Prospectus Directive) (i) who have professional
experience in matters relating to investments falling within
Article 19 (5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the Order), and/or
(ii) who are high net worth companies (or persons to whom it may
otherwise be lawfully communicated) falling within Article 49(2)(a)
to (d) of the Order (all such persons together, the relevant
persons). This document must not be acted on or relied on in the
United Kingdom by persons who are not relevant persons. In the
United Kingdom, any investment or investment activity to which this
document relates is only available to, and will be engaged in with,
relevant persons.
Canada
The offering of our
common stock in Canada is being made on a private placement basis
in reliance on exemptions from the prospectus requirements under
the securities laws of each applicable Canadian province and
territory where our common stock may be offered and sold, and
therein may only be made with investors that are purchasing, or
deemed to be purchasing, as principal and that qualify as both an
“accredited investor” as such term is defined in
National Instrument 45-106 Prospectus Exemptions or subsection
73.3(1) of the Securities
Act (Ontario) and as a “permitted client” as
such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and
Ongoing Registrant Obligations. Any offer and sale of our
common stock in any province or territory of Canada may only be
made through a dealer that is properly registered under the
securities legislation of the applicable province or territory
wherein our common stock is offered and/or sold or, alternatively,
where such registration is not required.
Any resale of our
common stock by an investor resident in Canada must be made in
accordance with applicable Canadian securities laws, which require
resales to be made in accordance with an exemption from, or in a
transaction not subject to, prospectus requirements under
applicable Canadian securities laws. These resale restrictions may
under certain circumstances apply to resales of the common stock
outside of Canada.
Securities
legislation in certain provinces or territories of Canada may
provide a purchaser with remedies for rescission or damages if this
prospectus (including any amendment thereto) contains a
misrepresentation, provided that the remedies for rescission or
damages are exercised by the purchaser within the time limit
prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable
provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult
with a legal advisor.
Pursuant to section
3A.3 (or, in the case of securities issued or guaranteed by the
government of a non-Canadian jurisdiction, section 3A.4) of
National Instrument 33-105 Underwriting Conflicts
(“NI 33-105”),
the underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of
interest in connection with this offering.
Upon receipt of
this prospectus, each Québec investor hereby confirms that it
has expressly requested that all documents evidencing or relating
in any way to the sale of the securities described herein
(including for greater certainty any purchase confirmation or any
notice) be drawn up in the English language only. Par la réception de ce document, chaque
investisseur québecois confirme par les présentes
qu’il a expressément exigé que tous les documents
faisant foi ou se rapportant de quelque manière que ce soit
à la vente des valeurs mobilières décrites aux
présentes (incluant, pour plus de certitude, toute
confirmation d’achat ou tout avis) soient rédigés
en anglais seulement.
LEGAL MATTERS
The validity of the
securities offered by this prospectus will be passed upon for us by
Disclosure Law Group, a Professional Corporation, San Diego,
California. Gracin & Marlow, LLP,
New York, New York, is acting as counsel for the underwriters in
connection with this offering.
EXPERTS
Our consolidated
financial statements appearing in our Annual Report on Form 10-K
for the year ended September 30, 2017, which is incorporated by reference into this
prospectus, have been audited by
Marcum LLP, an independent registered public accounting firm, as
set forth in their reports thereon. Such consolidated financial
statements are incorporated herein by reference in reliance upon
such reports given on the authority of such firm as experts in
accounting and auditing.
WHERE
YOU CAN FIND MORE
INFORMATION
We
are a public company and file annual, quarterly and special
reports, proxy statements and other information with the SEC. You
may read and copy any document we file at the SEC’s public
reference room at 100 F Street, NE, Washington, D.C. 20549. You can
request copies of these documents by writing to the SEC and paying
a fee for the copying cost. Please call the SEC at 1-800-SEC-0330
for more information about the operation of the public reference
room. Our SEC filings are also available, at no charge, to the
public at the SEC’s website at
http://www.sec.gov.
We
have filed with the SEC a Registration Statement on Form S-1 under
the Securities Act with respect to this offering of our securities.
This prospectus is part of that registration statement. This
prospectus does not contain all of the information set forth in the
registration statement or the exhibits to the registration
statement. For further information with respect to us and the
securities we are offering pursuant to this prospectus, you should
refer to the registration statement and its exhibits. Statements
contained in this prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily
complete, and you should refer to the copy of that contract or
other documents filed as an exhibit to the registration statement.
You may read or obtain a copy of the registration statement at the
SEC’s public reference facilities and Internet site referred
to above.
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
The SEC allows us
to incorporate by reference the information we file with it, which
means that we can disclose important information to you by
referring you to another document that we have filed separately
with the SEC. You should read the information incorporated by
reference because it is an important part of this prospectus.
Information in this prospectus supersedes information incorporated
by reference that we filed with the SEC prior to the date of this
prospectus, while information that we file later with the SEC will
automatically update and supersede the information in this
prospectus. We incorporate by reference into this prospectus and
the registration statement of which this prospectus is a part the
information or documents listed below that we have filed with the
SEC:
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our Annual Report
on Form 10-K for the year ended September 30, 2017, filed
with the SEC on December 21, 2017;
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Amendment No. 1 to
Annual Report on Form 10-K for the fiscal year ended September 30,
2017, filed on January 26, 2018;
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the information
specifically incorporated by reference into our Annual Report on
Form 10-K for the year ended December 31, 2017 from
our definitive proxy statement relating to our 2018 Annual Meeting
of Stockholders, filed with the SEC on February 6,
2018;
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our Quarterly
Report on Form 10-Q for the three months ended
December 31, 2017, filed with the SEC on February 14,
2018;
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our Quarterly
Report on Form 10-Q for the three months ended
March 31, 2018, filed with the SEC on May 15,
2018;
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our Quarterly
Report on Form 10-Q for the three months ended June 30,
2018, filed with the SEC on August 14, 2018;
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our Current Reports
on Form 8-K, filed with the SEC on October 13, 2017,
November 28, 2017, December 21, 2017, January 17, 2018, March 28,
2018, September 11, 2018, September 25, 2018, and September 28,
2018; and
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the description of
our common stock set forth in our registration statement on
Form 8-A, filed with the SEC on June 28, 2007, including
any further amendments thereto or reports filed for the purposes of
updating this description.
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We also incorporate
by reference any future filings (other than current reports
furnished under Item 2.02 or Item 7.01 of
Form 8-K and exhibits filed on such form that are related
to such items unless such Form 8-K expressly provides to
the contrary) made with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, including those made after
(i) the date of this Amendment No.
1 to the registration statement of which this prospectus is
a part and prior to effectiveness of such registration statement,
and (ii) the date of this prospectus and before the completion of
this offering of securities included in this prospectus, or until
we file a post-effective amendment that indicates the termination
of the offering of the common stock made by this prospectus and
will become a part of this prospectus from the date that such
documents are filed with the SEC. Information in such future
filings updates and supplements the information provided in this
prospectus. Any statements in any such future filings will
automatically be deemed to modify and supersede any information in
any document we previously filed with the SEC that is incorporated
or deemed to be incorporated herein by reference to the extent that
statements in the later filed document modify or replace such
earlier statements.
We will furnish
without charge to each person, including any beneficial owner, to
whom a prospectus is delivered, upon written or oral request, a
copy of any or all of the documents incorporated by reference into
this prospectus but not delivered with the prospectus, including
exhibits that are specifically incorporated by reference into such
documents. You should direct any requests for documents
to:
Bridgeline Digital, Inc.
Attn: Corporate Secretary
80 Blanchard Road
Burlington, MA 01803
(781) 376-5555
You should rely
only on information contained in, or incorporated by reference
into, this prospectus or in any free writing prospectus that we
have authorized for use in connection with this offering.
We have not, and the underwriters have
not, authorized anyone to provide you with information different
than that which is contained in or incorporated by reference in
this prospectus or in any free writing prospectus that we have
authorized for use in connection with this offering. We are
offering to sell, and seeking offers to buy, securities
only in jurisdictions where offers and sales are
permitted.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITY
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers, and controlling
persons, we have been advised that in the opinion of the SEC this
indemnification is against public policy as expressed in the
Securities Act and is therefore, unenforceable.
-44-
Up
to 7,530,120 Class A Units Consisting of Common Stock and
Warrants
Up
to 6,250 Class B Units Consisting of Series B Convertible
Preferred Stock and Warrants
Up
to 7,530,120 Shares of Common Stock Underlying the Series B
Convertible Preferred Stock and
7,530,120 Shares of Common Stock Underlying
Warrants
P R O S P E C T U S
ThinkEquity
a
division of Fordham Financial Management, Inc.
Through and
including
,
2018 (25 days after commencement of this offering), all dealers
that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers’ obligation to
deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution
The following table
indicates the expenses to be incurred in connection with the
offering described in this registration statement, other than
underwriting discounts and commissions, all of which will be paid
by us. All amounts are estimated except the Securities and Exchange
Commission registration fee and the Financial Industry Regulatory
Authority, Inc. (“FINRA”) filing fee.
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Amount
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SEC Registration
Fee
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$ 3,968
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FINRA Filing
Fee
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5,411
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Legal Fees and
Expenses
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155,000*
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Underwriter’s
non-accountable expense allowance
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62,500*
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Accounting Fees and
Expenses
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35,860*
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Transfer Agent and
Registrar fees and expenses
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6,000*
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Printing
Expenses
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20,000*
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Miscellaneous
Expenses
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5,000*
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Total
expenses
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$ 293,739*
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* Amounts shown are
estimates.
Item 14. Indemnification of Officers and
Directors
Our amended and restated certificate of incorporation
(“Charter”) and amended and restated bylaws
(“Bylaws”) contain provisions relating to the
limitation of liability and indemnification of directors and
officers. Our Charter provides that a director will not be
personally liable to us or our stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability:
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for
any breach of the director’s duty of loyalty to us or our
stockholders;
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for
acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
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under Section 174 of the Delaware General
Corporation Law (the “DGCL”); or
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for
any transaction from which the director derived any improper
personal benefit.
Our
Charter also provides that we will indemnify our directors and
officers to the fullest extent not prohibited by the DGCL, as it
presently exists or may hereafter be amended.
Our Bylaws provide that we will indemnify our
directors and officers to the fullest extent not prohibited by the
DGCL; provided, however,
that we may limit the extent of such
indemnification by individual contracts with our directors and
executive officers; and provided, further, that we are not required
to indemnify any director or executive officer in connection with
any proceeding (or part thereof) initiated by such person or any
proceeding by such person against us or our directors, officers,
employees or other agents unless:
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such
indemnification is expressly required to be made by
law;
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the
proceeding was authorized by the Board of Directors;
or
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such
indemnification is provided by us, in our sole discretion, pursuant
to the powers vested in us under the DGCL.
Our
Bylaws provide that we shall advance, prior to the final
disposition of any proceeding, promptly following request therefor,
all expenses by any director or executive officer in connection
with any such proceeding upon receipt of any undertaking by or on
behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be
indemnified under Article V of our Bylaws or otherwise.
Notwithstanding the foregoing, unless otherwise determined, no
advance shall be made by us if a determination is reasonably and
promptly made by the Board of Directors by a majority vote of a
quorum of directors who were not parties to the proceeding, or if
such a quorum is not obtainable, or even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in
a written opinion, that the facts known to the decision-making
party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to our
best interests.
Our
Bylaws also authorize us to purchase insurance on behalf of any
person required or permitted to be indemnified pursuant to Article
V of our Bylaws.
Section
145(a) of the DGCL authorizes a corporation to indemnify any person
who was or is a party, or is threatened to be made a party, to a
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of
the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action,
suit or proceeding, if the person acted in good faith and in a
manner the person reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
the person’s conduct was unlawful.
Section
145(b) of the DGCL provides in relevant part that a corporation may
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys’
fees) actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation
and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
The
DGCL also provides that indemnification under Section 145(d) can
only be made upon a determination that indemnification of the
present or former director, officer or employee or agent is proper
in the circumstances because such person has met the applicable
standard of conduct set forth in Section 145(a) and
(b).
Section
145(g) of the DGCL also empowers a corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of such person’s status as
such, whether or not the corporation would have the power to
indemnify such person against such liability under Section 145 of
the DGCL.
Section
102(b)(7) of the DGCL permits a corporation to provide for
eliminating or limiting the personal liability of one of its
directors for any monetary damages related to a breach of fiduciary
duty as a director, as long as the corporation does not eliminate
or limit the liability of a director for acts or omissions which
(1) which breached the director’s duty of loyalty to the
corporation or its stockholders, (2) which were not in good faith
or which involve intentional misconduct or knowing violation of
law, (3) under Section 174 of the DGCL; or (4) from which the
director derived an improper personal benefit.
We
have obtained directors’ and officers’ insurance to
cover our directors and officers for certain
liabilities.
We
plan to enter into an underwriting agreement, which provides that
the underwriters are obligated, under some circumstances, to
indemnify our directors, officers and controlling persons against
specified liabilities, including liabilities under the Securities
Act.
Item 15. Recent Sales of Unregistered Securities
The number of those securities sold and issued by
the Company prior to July 24, 2017 (the “Effective
Date”), as set forth
below, have been adjusted to reflect the 1-for-5 stock split
effectuated by the Company on the Effective Date. Accordingly,
those numbers included herein shall differ from the corresponding
numbers disclosed in our periodic reports filed with the SEC prior
to the Effective Date.
In
October 2015, we sold 136,000 shares of our common stock at a
purchase price of $5.00 per share, for aggregate consideration of
$680,000, to accredited investors through a private placement
transaction.
In December 2015, we issued a warrant to purchase
6,000 shares of common stock at a price of $20.00 per share to a
director in connection with a bank guaranty, which warrant was exercisable six-months after the
date of issuance and expires December 31, 2021.
In
February 2016, we issued an aggregate of 21,539 shares of
restricted common stock at $4.55 per share to four members of our
Board of Directors in lieu of cash payments as consideration for
their services as Board members.
In April 2016, our stockholders approved a
proposal for issuance of up to 800,000 shares of our common
stock upon conversion of certain outstanding convertible promissory
notes. From June 2016 through August 2016, all of the notes were
converted into shares of common stock.
In May 2016, we
issued 361,336 shares of common stock, resulting in net proceeds to
the Company of $1.2 million for the first closing in connection
with the conversion of term notes issued to certain accredited
investors, as approved by the stockholders on April 29, 2016.
We also issued to such investors
warrants to purchase an aggregate of 53,334 shares of our common
stock at a price of $3.75 per share, which warrants were exercisable six-months after
the date of issuance and expire five years from the date of
issuance. In June and July 2016, we issued an additional
172,000 shares of common stock, resulting in net proceeds to the
Company of $400,000 for the second and third closings in connection
with the conversion of these term notes.
In May 2016,
certain officers and directors converted all outstanding principal
and accrued but unpaid interest due under outstanding term notes
held by such officers and directors into an aggregate of 867,765
shares of our common stock at a conversion price of $3.75 per
share. In connection with the conversion, a total of 86,778
warrants to purchase common stock were issued at a price of $3.75
per share, which warrants were exercisable six months after the
date of issuance and expire five years from the date of
issuance.
In
July 2016, we sold 440,000 shares of common stock at $3.75 per
share to certain accredited investors in a private placement
transaction, resulting in net proceeds of $1.5 million to the
Company. We also issued to such investors warrants to purchase an
aggregate of 44,000 shares of our common stock at a price of $4.60
per share, which warrants were exercisable six-months after the
date of issuance and expire five and one-half years from the date
of issuance.
During
fiscal 2016, we issued 5,172 shares of common stock in connection
with a prior acquisition as payment of contingent
consideration.
In
October 2016, we issued to one of our vendors 2,000 shares of
common stock at $3.95 per share for an aggregate fair market value
of $7,850 in exchange for services provided.
In November 2016, we sold 427,073 shares of our
common stock at a purchase price of $2.40 per share, for aggregate
consideration of approximately $1.1 million, to accredited
investors through a private placement transaction.
We also issued to purchasers warrants
to purchase an aggregate of 213,538 shares of our common stock at a
price of $3.50 per share, which warrants were exercisable
six-months after the date of issuance and expire five and one-half
years from the date of issuance. In addition, we entered into a
registration right agreement with such purchasers to file a
registration statement to register the shares of common stock
issued as well as those shares of common stock underlying to the
warrants that were issued to the purchasers. Our President and CEO
and two of our directors purchased an aggregate of 78,740 shares of
common stock in this private offering; however, these officers and
directors waived their rights to participate in the registration
statement.
In
December 2016, we issued warrants to purchase 6,000 shares of
common stock at a price of $20.00 per share to a director in
connection with a bank guaranty, which warrants were exercisable
six-months after the date of issuance and expire on December 31,
2021.
In
February 2017, we issued an aggregate of 36,826 shares of
restricted common stock at $3.15 to five members of our Board of
Directors in lieu of cash payments as consideration for their
annual services as Board members.
In
June 2017, our CEO and President elected to receive shares of
common stock in lieu of a $20,000 cash payment for a bonus earned
for his services to the Company in the first half of the fiscal
year. He received 7,273 fully vested restricted shares of common
stock with a fair value price of $2.75 per share.
During
fiscal 2017, we issued 1,129 shares of common stock in connection
with a prior acquisition as payment of contingent
consideration.
In
October 2017, we issued to one of our lenders an eight-year warrant
to purchase 66,315 shares of our common stock at a price of $2.65
per share.
In December 2017, we issued a warrant to purchase
6,000 shares of common stock at a price of $20.00 per share to a
director in connection with a bank guaranty, which warrants were
exercisable six-months after the date of issuance and
expire December 31,
2021.
In
February 2018, we issued an aggregate of 41,006 shares of
restricted common stock at $2.39 per share to four members of our
Board of Directors in lieu of cash payments as consideration for
their annual services as Board members.
On September 7, 2018, we sold and issued Term
Notes to certain accredited investors in the aggregate principal
amount of $941,176, for which we received cash proceeds in
the aggregate amount of $760,000 after subtracting the original
issue discount and debt issuance costs. The Term Notes have an
original issue discount of fifteen percent (15%), bear interest at
a rate of twelve percent (12%) per annum, and mature on the earlier
to occur of (i) six months from September 7, 2018, or (ii) the
consummation of a debt or equity financing resulting in gross
proceeds to the Company of at least $3.0 million.
We believe that
each of the offers, sales and issuances of securities described in
Item 15 were exempt from registration under the Securities Act
pursuant to Regulation D under the Securities Act or pursuant to
Section 4(a)(2) of the Securities Act regarding transactions
not involving a public offering. The recipients of securities in
each of these transactions represented their intention to acquire
the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the stock certificates and instruments
issued in such transactions. All recipients had adequate access,
through their relationships with us, to information about
us.
II-4
Item 16. Exhibits
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|
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Incorporated
by Reference
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||
|
Exhibit
No.
|
Exhibit
|
Form
|
Filing
Date
|
Exhibit
No.
|
Filed
Herewith
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Form of Underwriting
Agreement
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|
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X
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Asset Purchase Agreement, dated as
of May 11, 2010, by and between Bridgeline Digital, Inc. and
TMX Interactive, Inc.
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10-Q
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May 17, 2010
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2.1
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Asset Purchase Agreement, dated as
of July 9, 2010, by and between Bridgeline Digital, Inc. and
e.magination network, LLC
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8-K
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July 15, 2010
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2.1
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Agreement and Plan of Merger, dated
as of October 3, 2011, by and among Bridgeline Digital,
Inc., Magnetic Corporation and Jennifer
Bakunas
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8-K
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October 6, 2011
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2.1
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|
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Agreement and Plan of Merger, dated
as of May 31, 2012, by and among Bridgeline Digital,
Inc., MarketNet, Inc. and Jill Bach
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8-K
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June 5, 2012
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2.1
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Amended and Restated Certificate of
Incorporation, as amended
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10-Q
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May 15, 2013
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3.1
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|
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|
Certificate of Amendment to Amended
and Restated Certificate of Incorporation, dated May 4,
2015
|
8-K
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May 5, 2015
|
3.1
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|
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|
Certificate of Designation of the
Series A Convertible Preferred Stock
|
8-K
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November 4,
2014
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3.1
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|
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Amended and Restated By
Laws
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10-Q
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February 17,
2015
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3.2
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| Form of Certificate of Designation of the Series B Convertible Preferred Stock |
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X
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Specimen Common Stock
Certificate (File No. 333-139298)
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SB-2/A
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June 20, 2007
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4.1
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|
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Form of
Warrant
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|
|
X
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|
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Form of Representative’s
Warrant
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S-1/A
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October 9,
2018
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4.2
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|
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5.1
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Opinion of Disclosure Law Group, a
Professional Corporation.
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X
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Employment Agreement with Roger
“Ari” Kahn, dated August 24,
2015
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10-K
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December 24,
2015
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10.1
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First Amendment to Employment
Agreement, Roger “Ari” Kahn, dated May 10,
2016
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8-K
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May 13, 2016
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10.1
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|
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Amended and Restated Stock
Incentive Plan, as amended
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DEF 14 A
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July 14, 2014
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C
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Securities Purchase Agreement
between Bridgeline Digital, Inc. and the investors named
therein, dated October 29, 2010
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8-K
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November 4,
2010
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10.1
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|
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Securities Purchase Agreement
between Bridgeline Digital, Inc. and the investors named
therein, dated May 31, 2012
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8-K
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June 5, 2012
|
10.1
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|
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Form of Common Stock Purchase
Warrant issued to Placement Agent, dated November 6,
2013
|
8-K
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November 12,
2013
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10.3
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|
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Placement Agent Agreement between
Bridgeline Digital, Inc. and Taglich Brothers, Inc., dated
October 30, 2013
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8-K
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November 12,
2013
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10.5
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|
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Form of Restricted Stock Agreement
by and between Bridgeline Digital, Inc. and certain Board
of Directors, dated February 24, 2014
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10-Q
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May 15, 2014
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10.2
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|
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Securities Purchase Agreement
between Bridgeline Digital, Inc. and the Investors named
therein dated March 28, 2014
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10-Q
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May 15, 2014
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10.3
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|
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Form of Common Stock Purchase
Warrant issued to Placement Agent, dated March 28,
2014
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10-Q
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May 15, 2014
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10.4
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|
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Securities Purchase Agreement
between Bridgeline Digital, Inc and the investors
therein, dated October 28, 2014
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8-K
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November 4,
2014
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10.1
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|
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|
Form of Common Stock Purchase
Warrant Issued to Placement Agent
|
8-K
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November 4,
2014
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10.2
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Form of Common
Stock Purchase Warrant Issued by Company to Michael Taglich dated
January 7, 2015
|
8-K
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January 9,
2015
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10.3
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Side Letter between
the Company and Michael Taglich, dated January 7,
2015
|
8-K
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January 9,
2015
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10.3
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Form of Common
Stock Purchase Warrant Issued by Company to Michael Taglich dated
February 17, 2015
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10-Q
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February 17,
2015
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10.2
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Form of Restricted
Stock Agreement
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10-Q
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May 15,
2015
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10.6
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|
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Form of Common
Stock Purchase Warrant Issued by Company to Michael Taglich dated
May 12, 2015
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10-Q
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May 15,
2015
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10.9
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|
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|
Form of Common
Stock Purchase Warrant Issued by Company to Michael Taglich dated
July 21, 2015
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8-K
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July 24,
2015
|
10.2
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|
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Securities Purchase
Agreement between Bridgeline Digital, Inc and the investors
therein, dated October 13, 2015
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10-Q
|
February 12,
2016
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10.3
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Bridgeline Digital
Inc. 2016 Stock Incentive Plan
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DEF 14
A
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March 22,
2016
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Appendix
B
|
|
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Form of Common
Stock Purchase Warrant issued to placement agent
|
8-K
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May 17,
2016
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10.3
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|
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|
Loan and Security
Agreement between Bridgeline Digital Inc. and Heritage Bank of
Commerce, dated June 9, 2016
|
8-K
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June 15,
2016
|
10.1
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|
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Unconditional
Guarantee entered into by Michael N. Taglich in favor of Heritage
Bank of Commerce, dated June 9, 2016
|
8-K
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June 15,
2016
|
10.2
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|
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Placement Agreement
between Bridgeline Digital, Inc and Taglich Brothers, Inc dated
March 31, 2016
|
8-K
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June 15,
2016
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10.3
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|
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First Amendment to
the Loan and Security Agreement between Bridgeline Digital
Inc. and Heritage Bank of Commerce, dated August 15,
2016
|
10-Q
|
August 15,
2016
|
10.12
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|
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|
Form of Securities
Purchase Agreement dated November 3, 2016
|
8-K
|
November 4,
2016
|
10.1
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|
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|
Form of Purchaser
Warrant
|
8-K
|
November 4,
2016
|
10.2
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|
Form of
Registration Rights Agreement dated November 3,
2016
|
8-K
|
November 4,
2016
|
10.3
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|
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|
Form of Insider
Securities Purchase Agreement dated November 3,
2016
|
8-K
|
November 4,
2016
|
10.4
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|
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Second Amendment to
the Loan and Security Agreement between Bridgeline Digital
Inc. and Heritage Bank of Commerce, dated December 14,
2016
|
10-K
|
December 14,
2016
|
10.66
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|
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Employment
Agreement with Michael D. Prinn dated November 11,
2016
|
10-Q
|
February 14,
2017
|
10.7
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|
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|
Third Amendment to
the Loan and Security Agreement between Bridgeline Digital,
Inc and Heritage Bank of Commerce
|
10-Q
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August 14,
2017
|
10.1
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|
|
|
First Amendment to
Affirmation of Guaranty between Michael N. Taglich and
Heritage Bank of Commerce
|
10-Q
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August 14,
2017
|
10.2
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|
|
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Seventh Amendment
to the Loan and Security Amendment between Bridgeline Digital, Inc.
and Heritage Bank of Commerce, dated May 10, 2018
|
10-Q
|
May 15,
2018
|
10.1
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|
|
|
First Amendment to
the Loan and Security Amendment between Bridgeline Digital, Inc.
and Montage Capital II LP, dated May 10, 2018
|
10-Q
|
May 15,
2018
|
10.2
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|
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Eighth Amendment to
the Loan and Security Amendment between Bridgeline Digital, Inc.
and Heritage Bank of Commerce, dated August 10,
2018
|
10-Q
|
August 14,
2018
|
10.1
|
|
|
|
Form of Note
Purchase Agreement
|
8-K
|
September 11,
2018
|
10.1
|
|
|
|
Form of Promissory
Note
|
8-K
|
September 11,
2018
|
10.2
|
|
|
|
Form of
Subordination Agreement
|
8-K
|
September 11,
2018
|
10.3
|
|
|
|
Ninth Amendment to
the Loan and Security Agreement between Bridgeline Digital, Inc.
and Heritage Bank of Commerce, dated September 21,
2018
|
8-K
|
September 25,
2018
|
10.1
|
|
|
|
Subsidiaries of the
Registrant
|
10-K
|
December 21,
2017
|
21.1
|
|
|
|
Consent of Marcum
LLP, Independent Registered Public Accounting
Firm
|
|
|
|
X
|
|
|
23.2
|
Consent of
Disclosure Law Group, a Professional Corporation (included in
Exhibit 5.1)
|
|
|
|
X
|
|
Power of Attorney
(included on signature page to the initial Registration
Statement)
|
S-1
|
October 9,
2018
|
Signature
Page
|
|
Item 17.
Undertakings
The undersigned
registrant hereby undertakes to provide to the underwriters at the
closing specified in the underwriting agreement certificates in
such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
The
undersigned registrant hereby undertakes:
|
(1)
|
To file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement:
|
|
|
(i)
|
To include any
prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
|
(ii)
|
To reflect in the
prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price
set forth in the “Calculation of Registration Fee”
table in the effective registration statement;
|
|
|
(iii)
|
To include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration
statement;
|
|
(2)
|
That, for the
purpose of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
|
|
(3)
|
To remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination
of the offering.
|
|
(4)
|
That, for the
purpose of determining liability of the registrant under the
Securities Act to any purchaser in the initial distribution of the
securities:
|
The
undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used
to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities
to such purchaser:
|
|
(i)
|
Any preliminary
prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule
424;
|
|
|
(ii)
|
Any free writing
prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
|
|
|
(iii)
|
The portion of any
other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
|
|
(iv)
|
Any other
communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
|
The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act,
each filing of the registrant’s annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
The
undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report, to
securityholders that is incorporated by reference in the prospectus
and furnished pursuant to and meeting the requirements of
Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide
such interim financial information.
The registrant
hereby further undertakes that:
(1) For
purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this registration statement as of the time
it was declared effective.
(2) For
the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of these securities at
that time shall be deemed to be the
initial bona
fide offering
thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-1 and has duly caused
this Amendment
No. 2 to the registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Burlington, Massachusetts on
October 12, 2018.
|
|
BRIDGELINE
DIGITAL, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Roger
Kahn
|
|
|
|
Roger
Kahn
|
|
|
|
President
and Chief Executive Officer (Principal Executive
Officer)
|
Pursuant
to the requirements of the Securities Act of 1933, this
registration statement
has been signed by the following persons in the capacities and on
the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Roger
Kahn
|
|
President,
Chief Executive Officer
|
|
October
12, 2018
|
|
Roger
Kahn
|
|
(Principal
Executive Officer) and Director
|
|
|
|
|
|
|
|
|
|
/s/ Carole
Tyner
|
|
Chief Financial
Officer
|
|
October
12, 2018
|
|
Carole
Tyner
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
October
12, 2018
|
|
Kenneth
Galaznik
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
October
12, 2018
|
|
Joni
Kahn
|
|
|
|
|
|
*
|
|
Director
|
|
October
12, 2018
|
|
Scott
Landers
|
|
|
|
|
|
*
|
|
Director
|
|
October
12, 2018
|
|
Michael
Taglich
|
|
|
|
|
|
*
By: /s/ Roger
Kahn
|
|
|
|
|
|
Attorney-in-fact
|
|
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|
|
II-10