8-K/A - BLIN - Equibles

UNITED STATED<br><br> <br>SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A<br><br> <br>(Amendment No. 1)
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CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): May 28, 2021
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BRIDGELINE DIGITAL, INC.<br><br> <br>(Exact name of registrant as specified in its charter)
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Delaware	001-33567	52-2263942
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(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)
100 Sylvan Road, Suite G-700<br><br> <br>Woburn, MA 01801<br><br> <br>(Address of principal executive offices, including zip code)
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(781) 376-5555<br><br> <br>(Registrant’s telephone number, including area code)
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Exchange Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

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. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	BLIN	Nasdaq Capital Market

EXPLANATORY NOTE

On May 28, 2021, Bridgeline Digital, Inc., a Delaware corporation (the “Company”), completed its previously disclosed acquisition of all of the issued and outstanding shares of Hawk Search, Inc. an Illinois corporation (“Hawk Search”), pursuant to the terms and conditions of the Share Purchase Agreement, dated May 11, 2021, by and among the Company, Hawk Search, Svanaco, Inc., an Illinois corporation, and Svanawar, Inc., an Illinois corporation (the “Acquisition”).

This Amendment No. 1 (this “Amendment”) is being filed by the Company for the purpose of amending the Current Report on Form 8-K originally filed by the Company with the U.S. Securities and Exchange Commission (the “Commission”) on June 4, 2021 in connection with the closing of the Acquisition (the “Original Report”) to provide the financial statements and pro forma financial information required by Items 9.01(a) and (b) of Form 8-K, which were not previously filed with the Original Report, but are permitted to be filed by amendment no later than 71 calendar days after the date the Original Report was required to be filed with the Commission. as permitted by the rules of the SEC.

Item 9.01 Financial Statements and Exhibits.

(a)	Financial statements of business acquired.

The following financial statements of Hawk Search are being filed as exhibits hereto and are incorporated by reference herein:

Exhibit 99.1* —	Hawk Search, Inc. audited financial statements, including the independent auditor’s report as of and for the year ended December 31, 2020.
Exhibit 99.2 —	Hawk Search, Inc. unaudited financial statements as March 31, 2021 for the three months ended March 31, 2021 and 2020.
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*	Pursuant to a letter from the Commission, dated June 18, 2021, the Commission stated that it would permit the omission of Hawk Search, Inc. financial statements as of and for the year ended December 31, 2019, as required by Rule 8-04 of Regulation S-X.
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(b)	Pro forma financial information.
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The following pro forma financial information is being filed as an exhibit hereto and is incorporated by reference herein:

Exhibit 99.3 —	Unaudited pro forma condensed combined financial statements for Bridgeline Digital, Inc and Hawk Search for the year ended September 30, 2020, and for the six months ended March 31, 2021.
(c)	Not Applicable.
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(d)	Exhibits.
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10.1	Share Purchase Agreement, by and between the Company, Svanaco, Inc., an Illinois corporation, Svanawar, Inc., an Illinois corporation, and Hawk Search Inc., an Illinois corporation, dated May 11, 2021, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 12, 2021.
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23.1	Consent of PKF O’Connor Davies, LLP Independent Auditor of Hawk Search, Inc.
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99.1	Audited financial statements of Hawk Search, Inc. as of and for the year ended December 31, 2020 and Independent Auditor’s Report thereon.
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99.2	Hawk Search, Inc. unaudited financial statements as March 31, 2021 for the three months ended March 31, 2021 and 2020.
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99.3	Unaudited pro forma condensed combined financial statements for Bridgeline Digital, Inc and Hawk Search for the year ended September 30, 2020, and for the six months ended March 31, 2021.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BRIDGELINE DIGITAL, INC.
(Registrant)
By:	/s/Mark G. Downey
	Mark G. Downey
	Chief Financial Officer and Treasurer

Date: August 12, 2021

ex_275088.htm

Exhibit 23.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the incorporation by reference in the Registration Statements of Bridgeline Digital, Inc. on Form S-3 (File Nos. 333-239104 and 333- 256638) **** of our report dated August 12, 2021 with respect to our audit of the financial statements of Hawk Search, Inc. as of December 31, 2020 and for the year then ended, which report appears in the amended Form 8-K of Bridgeline Digital, Inc. filed with the U.S. Securities and Exchange Commission on August 12, 2021.

/s/ PKF O’Connor Davies, LLP

Harrison, NY

August 12, 2021

ex_275089.htm

Exhibit 99.1

HAWK SEARCH, INC.

FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2020

HAWK SEARCH, INC.

FOR THE YEAR ENDED DECEMBER 31, 2020

Table of Contents

	Page
Financial Statements
Independent Auditors’ Report	1 ‑ 2
Balance sheet	3
Statement of operations	4
Statement of changes in stockholders' deficit	5
Statement of cash flows	6
Notes to financial statements	7 ‑ 12

Independent Auditors’ Report

To the Stockholders

Hawk Search, Inc.

We have audited the accompanying financial statements of Hawk Search, Inc. (the “Company”), which comprise the balance sheet as of December 31, 2020, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations, changes in stockholders’ deficit and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matter

As discussed in note 8 to the financial statements, on May 28, 2021 the Company was sold to Bridgeline Digital, Inc. (“Bridgeline”). As of that date, the Company became a wholly‑owned subsidiary of Bridgeline. Our opinion is not modified with respect to this matter.

/s/ PKF O'Connor Davies, LLP

Harrison, NY

August 12, 2021

HAWK SEARCH, INC.

BALANCE SHEET

DECEMBER 31, 2020

ASSETS
Cash	234,385
Accounts receivable	420,194
Other current assets	41,323
Due from related parties	21,126
TOTAL ASSETS	717,028
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable	680,062
Accrued expenses and other current liabilities	33,959
Due to related parties	45,658
Deferred revenue	730,565
Total liabilities	1,490,244
Commitments and contingencies (Note 7)
Stockholders' Deficit:
Common stock, 0.01 par value, 10,000 shares authorized, issued and outstanding	100
Accumulated deficit	(773,316	)
Total stockholders' deficit	(773,216	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	717,028

All values are in US Dollars.

The accompanying notes are an integral part of these financial statements.

HAWK SEARCH, INC.

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

Revenues	$	3,947,130
Cost of services		2,035,179
Gross profit		1,911,951
Operating expenses		3,152,583
Loss from operations		(1,240,632	)
Other income:
Government grant income (Note 4)		198,100
Loss before provision for income taxes		(1,042,532	)
Benefit from income taxes		35,066
Net loss	$	(1,007,466	)

The accompanying notes are an integral part of these financial statements.

HAWK SEARCH, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 2020

	Common Stock				Retained<br><br> <br>Earnings
	Shares		Amount		(Deficit)			Total
Balance ‑ January 1, 2020		10,000	$	100	$	234,150		$	234,250
Net loss		-		-		(1,007,466	)		(1,007,466	)
BALANCE ‑ DECEMBER 31, 2020		10,000	$	100	$	(773,316	)	$	(773,216	)

The accompanying notes are an integral part of these financial statements.

HAWK SEARCH, INC.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2020

Cash flows from operating activities:
Net loss	$	(1,007,466	)
Adjustments to reconcile net loss to net cash used in operating activities:
Government grant income (Note 4)		(198,100	)
Changes in operating assets and liabilities:
Accounts receivable		(138,467	)
Other current assets		8,677
Accounts payable		561,726
Accrued expenses and other current liabilities		33,959
Due to/from related parties		20,200
Deferred revenue		591,649
Net cash used in operating activities		(127,822	)
Cash flows from financing activities:
Proceeds received under Paycheck Protection Program		198,100
Net increase in cash		70,278
Cash ‑ beginning		164,107
CASH ‑ ENDING	$	234,385
Supplemental disclosures of cash flow information:
Income taxes paid	$	1,290

The accompanying notes are an integral part of these financial statements.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 1.	DESCRIPTION OF BUSINESS

Hawk Search, Inc. (the "Company") is an intelligent search and recommendations platform that powers success for any size business across all industries, whose goal is to equip organizations with innovative tools to deliver accurate and customizable search experiences that enable users to find the relevant results for their needs in context, no matter the device, platform, or language. The Company delivers engaging and personalized search functionality through its innovative features, which enable marketers, merchandisers and developers to accomplish their goals. The Company was incorporated under the laws of the state of Illinois **** in 2012.

In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease (“COVID‑19”) as a pandemic. The Company has adjusted certain aspects of its operations to protect employees and customers while still meeting customers’ needs for vital technology. The Company will continue to monitor the situation closely and it is possible that it will implement further measures. In light of the uncertainty as to the severity and duration of the pandemic, the impact on its revenues, profitability and financial position is uncertain at this time.

NOTE 2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates included in these financial statements are the valuation of accounts receivable, including the adequacy of the allowance for doubtful accounts, and recognition and measurement of deferred revenues. The complexity of the estimation process and factors relating to assumptions, risks and uncertainties inherent with the use of the estimates affect the amount of revenue and related expenses reported in the Company’s financial statements. Internal and external factors can affect the Company’s estimates. Actual results could differ from those estimates.

Accounts receivable

Accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit‑worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial conditions of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management's assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has made reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. At December 31, 2020, management determined that no allowance for doubtful accounts was necessary.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue recognition

Revenue is recognized when control of services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue is reported net of applicable sales and use tax.

The Company recognizes revenue from contracts with customers using a five‑step model, which is described below:

●	Identify the customer contract;
●	Identify performance obligations that are distinct;
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●	Determine the transaction price;
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●	Allocate the transaction price to the distinct performance obligations; and
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●	Recognize revenue as the performance obligations are satisfied.
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Identify the customer contract

A customer contract is generally identified when there is approval and commitment from both the Company and its customer, the rights have been identified, payment terms are identified, the contract has commercial substance and collectability and consideration is probable.

Identify performance obligations that are distinct

A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Determine the transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales taxes that are collected on behalf of government agencies.

Allocate the transaction price to distinct performance obligations

The transaction price is allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services being provided to the customer. The Company determines the SSP of its goods and services based upon the historical average sales prices for each type of software license and professional services sold.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income taxes (continued)

Recognize revenue as the performance obligations are satisfied

Revenue is recognized when or as control of the promised goods or services is transferred to customers. Revenue from SaaS licenses is recognized ratably over the subscription period beginning on the date the license is made available to customers. Most subscription contracts are three‑year terms. Customers who license the software on a perpetual basis receive rights to use the software for an indefinite time period and an option to purchase post‑customer support (“PCS”). PCS revenue is recognized ratably on a straight‑line basis over the period of performance and the perpetual license is recognized upon delivery. The Company also offers hosting services for those customers who purchase a perpetual license and do not want to run the software in their environment. Revenue from hosting is recognized ratably over the service period, ranging from one to three‑year terms. The Company recognizes revenue from professional services as the services are provided.

Customer Payment Terms

Payment terms with customers typically require payment 30 days from invoice date. Payment terms may vary by customer but generally do not exceed 45 days from invoice date. Invoicing for digital engagement services are either monthly or upon achievement of milestones and payment terms for such billings are within the standard terms described above. Invoices for subscriptions and hosting are typically issued monthly and are generally due in the month of service.

The Company records a contract asset when it has a right to payment from a customer that is conditional on events other than the passage of time. The Company also records a contract liability when a customer prepays but the Company has not fulfilled its performance obligations. The Company did not have any significant contract assets as of December 31, 2020. Deferred revenues reflected in the accompanying balance sheets represent amounts billed for which revenue has not yet been recognized. Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

As of December 31, 2020, approximately $731,000 of revenue is expected to be recognized from remaining performance obligations for contracts with original performance obligations that exceed one year. The Company expects to recognize revenue on the full amount of these remaining performance obligations over the next 12 months.

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements and tax returns. Deferred income taxes are recognized based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company provides for reserves for potential payments of taxes to various tax authorities related to uncertain tax positions. Reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is “more likely than not” to be realized following resolution of any uncertainty related to the tax benefit, assuming that the matter in question will be raised by the tax authorities. Interest and penalties associated with uncertain tax positions are included in the provision for income taxes.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising

Advertising costs are expensed as incurred and aggregated to approximately $142,400 for the year ended December 31, 2020.

NOTE 3.	CONCENTRATION OF CREDIT RISK

The Company places its cash at banking institutions which, at times, may be in excess of the Federal Deposit Insurance Corporation ("FDIC") limit. The Company has not experienced any losses in such accounts.

Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company's customer base, thus spreading the trade credit risk. Generally, the Company's policies do not require collateral to support accounts receivable.

As of December 31, 2020, two customers represented approximately 16% and 10% of accounts receivable. For the year ended December 31, 2020, no single third party customer accounted for more than 10% of the Company's revenues.

NOTE 4.	PAYCHECK PROTECTION PROGRAM

On April 7, 2020, the Company entered into a loan with Wintrust Bank as the lender in an aggregate principal amount of $198,100 (“PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”). The PPP, which was established as part of the CARES Act, provides for loans to qualifying businesses for amounts up to 2.5 times certain average monthly payroll expenses of the qualifying business. The loan and accrued interest, or a portion thereof, may be forgiven after 24 weeks so long as the borrower uses the loan proceeds for eligible purposes including payroll, benefits, rent, mortgage interest and utilities, and maintains its payroll levels, as defined by the PPP. At least 60% of the amount forgiven must be attributable to payroll costs, as defined by the PPP.

The PPP loan matures two years from the date of first disbursement of proceeds to the Company (the “PPP Loan Date”) and accrues interest at a fixed rate of 1%. The Paycheck Protection Program Flexibility Act of 2020 extended the deferral period for payments of principal, interest, and fees on all PPP loans to the date that the Small Business Administration ("SBA") remits the borrower’s loan forgiveness amount to the lender. The Note provides for prepayment and customary events of default, including, among other things, cross‑defaults on any other loan with the lender. The PPP Loan may be accelerated upon the occurrence of an event of default.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 4.	PAYCHECK PROTECTION PROGRAM (CONTINUED)

U.S GAAP does not contain authoritative accounting standards for forgivable loans provided by governmental entities to a for‑profit entity. Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. Based on the facts and circumstances, the Company determined it most appropriate to account for the PPP Loan proceeds as an in‑substance government grant by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance. Under the provisions of IAS 20, “a forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”; however, based on certain interpretations, it is analogous to “probable” as defined in FASB ASC 450‑20‑20 under U.S GAAP, which is the definition the Company has applied to its expectations of PPP Loan forgiveness. Under IAS 20, government grants are recognized in earnings on a systematic basis over the periods in which the Company recognizes costs for which the grant is intended to compensate (i.e., qualified expenses). Further, IAS 20 permits for the recognition in earnings either separately under a general heading such as other income, or as a reduction of the related expenses. The Company has elected to recognize government grant income separately within other income to present a clearer distinction in its financial statements between its operating income and the amount of net income resulting from the PPP loan and subsequent forgiveness. The Company believes this presentation method promotes greater comparability amongst all periods presented.

The Company applied for PPP Loan forgiveness in full and received approval from the SBA on January 8, 2021. If it is determined that the Company was not eligible to receive the PPP loan or that the Company has not adequately complied with the rules, regulations and procedures applicable to the SBA’s loan program, the Company could be subject to penalties and could be required to repay the amounts forgiven.

NOTE 5.	RETIREMENT PLAN

Substantially all of the Company's employees may elect to defer a portion of their annual compensation in the Company‑sponsored 401(k) tax‑deferred savings plan. The Company makes matching contributions in some of these plans. The amount charged to expense for this plan was approximately $60,000 for the year ended December 31, 2020 and is included in "Operating expenses" in the accompanying statement of operations and accumulated deficit.

NOTE 6.	RELATED‑PARTY TRANSACTIONS

During 2020, the Company performed services on behalf of an entity affiliated by common ownership, in which total sales were approximately $1,000,000. Accounts receivable on the accompanying balance sheets include **** $52,905 (or 13%) **** due from the Company's affiliate as of December 31, 2020.

During 2020, **** the Company was charged approximately $2,470,000 by the same affiliated entity, for its share of various expenses. Approximately $2,035,000 and $435,000 are included in "Cost of services" and "Operating expenses", respectively, in the accompanying statement of operations. Amounts included in "Due to related parties" in the accompanying balance sheet consist of amounts arising from charges for operating expenses paid by this related party on the Company's behalf. Accounts payable on the accompanying balance sheets include **** $585,553 (or 90%) **** due to the Company's affiliate as of December 31, 2020.

Lease commitments

In connection with the above, during 2020, the Company was charged $5,000 per month for a portion of the base lease and occupancy costs. The total amount charged for 2020 was $60,000 and is included in "Operating expenses" in the accompanying statement of operations and accumulated deficit.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 7.	COMMITMENTS AND CONTINGENCIES

Litigation

The Company is, from time to time, involved in ordinary and routine litigation. Management presently believes that there are no proceedings, individually or in the aggregate, which will have a material adverse effect on the Company's financial position, results of operations or cash flows. Nevertheless, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include money damages and, in such event, could result in a material adverse impact on the Company's financial position, results of operations or cash flows for the period in which the ruling occurs. There is no pending litigation, or known threat of litigation, as of the date on which these financial statements were available to be issued.

NOTE 8.	SUBSEQUENT EVENTS

The Company evaluates events occurring after the date of the statement of financial condition for potential recognition or disclosure in its financial statements. The Company did not identify any material subsequent events requiring adjustment to or disclosure in its financial statements, except as disclosed in Note 4 and below.

On May 28, 2021, all of the issued and outstanding shares of the Company were sold to Bridgeline Digital, Inc. ("Bridgeline"). As of that date, the Company became a wholly‑owned subsidiary of Bridgeline. The purchase price consisted of (1) cash paid at closing, (2) deferred cash payable on or before December 31, 2021, (3) shares of the Purchaser’s newly designated Series D Convertible Preferred Stock, and (4) a performance based earn‑out.

ex_275090.htm

Exhibit 99.2

HAWK SEARCH, INC.

UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

HAWK SEARCH, INC.

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Table of Contents

	Page
Unaudited Financial Statements
Balance sheets as of March 31, 2021 and December 31, 2020	1
Statements of operations for the three months ended March 31, 2021 and 2020	2
Statement of changes in stockholders' deficit for the three months ended March 31, 2021 and 2020	3
Statements of cash flows	4
Notes to financial statements	5 ‑ 6

HAWK SEARCH, INC.

BALANCE SHEETS

(UNAUDITED)

			December 31,<br><br> <br>2020
ASSETS
Cash	109,041		$	234,385
Accounts receivable	614,062			420,194
Other current assets	41,323			41,323
Due from related parties	16,718			21,126
TOTAL ASSETS	781,144		$	717,028
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable	730,629		$	680,062
Accrued expenses and other current liabilities	92,785			33,959
Due to related parties	-			45,658
Deferred revenue	924,742			730,565
Total liabilities	1,748,156			1,490,244
Commitments and contingencies (Note 4)
Stockholders' Deficit:
Common stock, 0.01 par value, 10,000 shares authorized, issued and outstanding	100			100
Accumulated deficit	(967,112	)		(773,316	)
Total stockholders' deficit	(967,012	)		(773,216	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	781,144		$	717,028

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited financial statements.

HAWK SEARCH, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three months ended<br><br> <br>March 31,
	2021			2020
Revenues	$	1,192,186		$	990,686
Cost of services		500,086			468,750
Gross profit		692,100			521,936
Operating expenses		885,896			671,905
Net loss	$	(193,796	)	$	(149,969	)

The accompanying notes are an integral part of these unaudited financial statements.

HAWK SEARCH, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT)

(UNAUDITED)

	For the Three Months Ended March 31, 2021
	Common Stock				Accumulated
	Shares		Amount		Deficit			Total
Balance ‑ January 1, 2021		10,000	$	100	$	(773,316	)	$	(773,216	)
Net loss		-		-		(193,796	)		(193,796	)
BALANCE ‑ MARCH 31, 2021		10,000	$	100	$	(967,112	)	$	(967,012	)
	For the Three Months Ended March 31, 2020
---	---	---	---	---	---	---	---	---	---	---
					Retained<br><br> <br>Earnings/
	Common Stock				(Accumulated
	Shares		Amount		Deficit)			Total
Balance ‑ January 1, 2020		10,000	$	100	$	234,150		$	234,250
Net loss		-		-		(149,969	)		(149,969	)
BALANCE ‑ MARCH 31, 2020		10,000	$	100	$	84,181		$	84,281

The accompanying notes are an integral part of these unaudited financial statements.

HAWK SEARCH, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three months ended<br><br> <br>March 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(193,796	)	$	(149,969	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Changes in operating assets and liabilities:
Accounts receivable		(193,868	)		(161,271	)
Other current assets		-			50,000
Accounts payable		50,567			192,421
Accrued expenses and other current liabilities		58,826			50,214
Due to/from related parties		(41,250	)		(6,049	)
Deferred revenue		194,177			92,447
Net cash (used in) provided by operating activities		(125,344	)		67,793
Cash ‑ beginning		234,385			164,107
CASH ‑ ENDING	$	109,041		$	231,900
Supplemental disclosures of cash flow information:
Income taxes paid	$	-		$	-

The accompanying notes are an integral part of these unaudited financial statements.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1.	BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in connection with the acquisition of Hawk Search, Inc., an Illinois corporation, (the "Company"), by Bridgeline Digital, Inc.'s ("Bridgeline") and to comply with the rules and regulations of the Securities and Exchange Commission ("SEC") for inclusion by Bridgeline in its current report on Form 8‑K/A.

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 2020, included elsewhere in this Form 8‑K/A. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the interim financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2020, included elsewhere in this Form 8‑K/A have been omitted.

NOTE 2.	ACCOUNTS RECEIVABLE

As of March 31, 2021, one customer represented approximately 22% of accounts receivable. As of December 31, 2020, two customers represented approximately 16% and 10% of accounts receivable. For the three months ended March 31, 2021 and 2020, no single third party customer accounted for more than 10% of the Company's revenues. At March 31, 2021 and December 31, 2020, management determined that no allowance for doubtful accounts was necessary.

NOTE 3.	RELATED‑PARTY TRANSACTIONS

During the three months ended March 31, 2021 and 2020, the Company performed services on behalf of an entity affiliated by common ownership, in which total sales were approximately $253,000 and $243,000, respectively. Accounts receivable on the accompanying balance sheets include $114,000 (or 19%) and $52,905 (or 13%) due from the Company's affiliate as of March 31, 2021 and December 31, 2020, respectively.

During the three months ended March 31, 2021 and 2020, **** the Company was charged approximately $636,000 and $585,000 by the same affiliated entity, for its share of various expenses. Approximately $500,000 and $136,000 are included in "Cost of services" and "Operating expenses", respectively, in the accompanying statement of operations for the three months ended March 31, 2021 and $469,000 and $116,000, respectively, for the three months ended March 31, 2020. Accounts payable on the accompanying balance sheets include $114,000 (or 94%) and $585,553 (or 86%) due to the Company's affiliate as of March 31, 2021 and December 31, 2020, respectively.

Lease commitments

In connection with the above, during the three months ended March 31, 2021 and 2020, the Company was charged $5,000 per month for a portion of the base lease and occupancy costs. The total amount charged during each of the three months ended March 31, 2021 and 2020 was $15,000 and is included in "Operating expenses" in the accompanying statement of operations.

HAWK SEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 4.	COMMITMENTS AND CONTINGENCIES

Litigation

NOTE 5.	SUBSEQUENT EVENTS

ex_275091.htm

Exhibit 99.3

Bridgeline Digital, Inc.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined financial information are based on the historical financial statements of Bridgeline Digital, Inc. (“Bridgeline” or the “Company”) and Hawk Search, Inc. (“Hawk Search”), after giving effect to the Company’s acquisition of Hawk Search on May 28, 2021 and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma combined financial information..

The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and does not represent the consolidated results or financial position of Bridgeline had the Transaction been completed as of the dates indicated. Specifically, the unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies, revenue enhancements or restructuring costs that the combined company may achieve or incur as a result of the Transaction. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. The pro forma adjustments represent the Company’s best estimates and are based upon current available information and certain assumptions that the Company believes are reasonable under the circumstances.

The unaudited pro forma condensed combined financial information should be read in conjunction with:

●	Bridgeline’s historical consolidated financial statements and accompanying notes contained in Bridgeline’s Annual Report on Form 10-K for its fiscal year ended September 30, 2020, filed with the Securities and Exchange Commission (the “Commission”) on December 23, 2020;
●	Bridgeline’s historical consolidated financial statements and accompanying notes contained in Bridgeline’s Quarterly Report on Form 10-Q for its quarter ended March 31, 2021, filed with the Commission on May 17, 2021;
---	---
●	Hawk Search, Inc. historical financial statements and accompanying notes for its fiscal year ended December 31, 2020, included as Exhibit 99.1 in this amended Current Report on Form 8-K;
---	---
●	Hawk Search Inc. historical financial statements and accompanying notes for the three months ended March 31, 2021 and 2020, included as Exhibit 99.2 in this amended Current Report on Form 8-K;
---	---
●	The SPA filed as Exhibit 10.1 to Bridgeline’s Current Report on Form 8-K filed with the Commission on May 12, 2021.
---	---

Accounting Periods Presented

Hawk Search’s historical fiscal year ended on December 31, 2020 and, for purposes of this unaudited pro forma condensed combined financial information has been recaptioned and/or combined with the Company’s fiscal year ended September 30, 2020 financial statements as explained below.

The unaudited pro forma condensed combined statements of operations of the Company and Hawk Search for the year ended September 30, 2020 are presented as if the Hawk Search acquisition had taken place on October 1, 2019, and due to different fiscal period ends, combines the historical results of the Company for the year ended September 30, 2020 and the historical results of Hawk Search for the year ended December 31, 2020.

Reporting Currency

As the Company’s reporting currency is US Dollars (USD), was used to translate Hawk Search’s historical financial statements to USD for purposes of these unaudited pro forma condensed combined financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(in thousands, except share and per share data)

1.	Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial information has been prepared using the historical financial information of Bridgeline and Hawk Search and presents the pro forma effects of the Transaction and certain adjustments described herein in accordance with Article 11 of Regulation S-X. The historical financial information of Hawk Search has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), with Bridgeline deemed as the accounting acquirer. The unaudited pro forma condensed combined financial information may differ from the final purchase accounting for a number of reasons, including the fact that the estimates of fair values of assets acquired and liabilities assumed are preliminary and subject to change when the formal valuation and other analyses are finalized. The differences between the preliminary estimates and the final purchase accounting could have a material impact on the accompanying unaudited pro forma condensed combined financial information.

The historical financial information has been adjusted to give effect to matters that are (i) directly attributable to the Transaction, (ii) factually supportable and (iii) with respect to the statements of operations, expected to have a continuing impact on the operating results of the combined company. The unaudited pro forma condensed combined statements of operations exclude non-recurring items directly related to the Transaction.

2.	Description of the Acquisition

On May 11, 2021, Bridgeline Digital, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Svanaco, Inc., an Illinois corporation, Svanawar, Inc., an Illinois corporation (collectively, the “Sellers”), and Hawk Search Inc., an Illinois corporation (“Hawk Search”), pursuant to which the Company will purchase all of the issued and outstanding shares of capital stock of Hawk Search from the Sellers (the “Acquisition”). The total consideration payable by the Company under the Purchase Agreement is approximately $11.85 million, subject to certain working capital and purchase price adjustments contained in the Purchase Agreement (the “Purchase Price”). The Purchase Price is payable as follows: (i) an initial cash payment of approximately $5.75 million (subject to certain working capital adjustments pursuant to the Purchase Agreement) payable on the Closing Date (as defined in the Purchase Agreement), (ii) the issuance of approximately $1.5 million of newly designated shares of the Company’s preferred stock, par value $0.001 per share, (iii) approximately $2.0 million in cash, to be paid on or before December 31, 2021 (subject to certain adjustments pursuant to the Purchase Agreement), and (iv) up to approximately $2.6 million as a performance based earnout payable within 30 days of the Company upon conclusion of its fiscal year 2022 annual audit and filing its Annual Report on Form 10-K for the fiscal year ending September 30, 2022.

3.	Purchase Price Consideration and Allocation

The Company accounted for the Hawk Search transaction as a business combination. The Company determined that the fair value of the gross assets acquired was not concentrated in a single identifiable asset of a group of similar assets. Assets acquired and liabilities assumed have be recognized at their estimated fair values as of the acquisition date. The fair value of intangible assets was based on valuations using a discounted cash flow model (level 3 inputs) which requires significant estimates and assumptions, including estimating future revenues and costs. The fair value of contingent consideration was determined based on the probability of achievement of the revenue targets and operational goals, which includes estimating future revenues. The excess of the purchase price over the assets acquired and liabilities assumed was recognized as goodwill. The goodwill is attributable to expected synergies and customer cross selling opportunities between the Company and Hawk Search.

The acquisition date fair value of consideration transferred was as follows:

Cash, including deferred cash payable	6,800
Series D Convertible Preferred Stock (1,500 shares at 618 per share)	930
Contingent consideration (earn-outs)	2,190
	9,920

All values are in US Dollars.

The preliminary acquisition date fair value of assets acquired and liabilities assumed was as follows:

Assets acquired:	****	****
Cash	$	100
Non-cash current assets		780
Intangible assets:
Acquired software		560
Customer relationships		3,410
Domain and trade names		620
Goodwill		7,540
Total assets acquired		13,010
Liabilities assumed:	****	****
Current liabilities		1,909
Deferred tax liabilities		1,181
Total liabilities assumed		3,090
Total consideration paid	$	9,920

The average useful lives of the identifiable intangible assets acquired was five years for acquired software, twelve years for customer relationships and fifteen years for domain and trade names.

BRIDGELINE DIGITAL, INC.

PRO FORMA CONDENSED CONSOLIDATED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2020

(unaudited)

(in thousands, except share data)

	Year Ended September 30, 2020
	Historical			Historical			Pro-Forma
	Bridgeline Digital			Hawk Search			Combined
Revenue	$	10,907		$	3,947		$	14,854
Cost of revenue		4,507			2,035			6,542
Gross profit		6,400			1,912			8,312
Operating expenses		8,044			3,152			11,196
Income (loss) from operations		(1,644	)		(1,240	)		(2,884	)
Interest and other, net		1,981			198			2,179
Income (loss) before income taxes		337			(1,042	)		(705	)
Provision for (benefit from) income taxes		11			(35	)		(24	)
Net income (loss)	$	326		$	(1,007	)	$	(681	)
Dividends on convertible preferred stock		(106	)		-			(106	)
Deemed dividend on amendment of Series A convertible preferred stock		(2,314	)		-			(2,314	)
Net income (loss) applicable to common shareholders	$	(2,094	)	$	(1,007	)	$	(3,101	)
Net income/(loss) per share attributable to common shareholders:
Basic	$	(0.59	)				$	(0.87	)
Diluted	$	(0.59	)				$	(0.87	)
Number of weighted average shares outstanding:
Basic		3,555,032						3,555,032
Diluted		3,555,032						3,555,032

BRIDGELINE DIGITAL, INC.

PRO FORMA CONDENSED CONSOLIDATED COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2021

(unaudited)

(in thousands, except share data)

	Six Months Ended March 31, 2021
	Historical			Historical			Pro-Forma
	Bridgeline Digital			Hawk Search			Combined
Revenue	$	5,710		$	1,603		$	7,313
Cost of revenue		2,023			1,341			3,364
		3,687			262			3,949
Operating expenses		3,635			1,560			5,195
Income (loss) from operations		52			(1,298	)		(1,246	)
Interest and other, net		(1,769	)		35			(1,734	)
		(1,717	)		(1,263	)		(2,980	)
Provision for income taxes		1			-			1
Net income (loss)	$	(1,718	)	$	(1,263	)	$	(2,981	)
Net income (loss) applicable to common shareholders	$	(1,718	)	$	(1,263	)	$	(2,981	)
Net income/(loss) per share attributable to common shareholders:
Basic	$	(0.36	)				$	(0.63	)
Diluted	$	(0.36	)				$	(0.63	)
Number of weighted average shares outstanding:
Basic		4,706,869						4,706,869
Diluted		4,706,869						4,706,869

BRIDGELINE DIGITAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

			Hawk Search			****	****	****
			March 31,			Pro-Forma
			2021			Combined
ASSETS	****	****	****	****	****	****	****	****
Current assets:
Cash and cash equivalents	3,497		$	109		$	3,606
Accounts receivable, net	717			614			1,331
Prepaid expenses	394			-			394
Other current assets	537			58			595
Total current assets	5,145			781			5,926
Property and equipment, net	240			-			240
Operating lease assets	584			-			584
Intangible assets, net	3,856			-			3,856
Goodwill	8,018			-			8,018
Other assets	86			-			86
Total assets	17,929		$	781		$	18,710
LIABILITIES AND STOCKHOLDERS' EQUITY	****	****	****	****	****	****	****	****
Current liabilities:
Current portion of long-term debt	659		$	-		$	659
Current portion of operating lease liabilities	191			-			191
Accounts payable	1,236			731			1,967
Accrued liabilities	701			93			794
Purchase price and contingent consideration payable	2,006			-			2,006
Paycheck Protection Program Liability	-			-			-
Deferred revenue	1,666			924			2,590
Total current liabilities	6,459			1,748			8,207
Long-term debt, net of current portion	1,461			-			1,461
Operating lease liabilities, net of current portion	393			-			393
Warrant liabilities	4,205			-			4,205
Other long-term liabilities	22			-			22
Total liabilities	12,540			1,748			14,288
Commitments and contingencies
Stockholders' equity:
Preferred stock - 0.001 par value; 1,000,000 shares authorized; Series C Convertible Preferred stock: 11,000 shares authorized; 350 shares issued and outstanding at March 31, 2021 and September 30, 2020	-			-			-
Series A Convertible Preferred stock: 264,000 shares authorized; no shares outstanding at March 31, 2021 and September 30, 2020	-			-			-
Common stock - 0.001 par value; 50,000,000 shares authorized; 5,391,548 shares at March 31, 2021 and 4,420,170 shares at September 30, 2020, issued and outstanding	5						5
Additional paid-in-capital	81,125			-			81,125
Accumulated deficit	(75,301	)		(967	)		(76,268	)
Accumulated other comprehensive loss	(440	)		-			(440	)
Total stockholders' equity	5,389			(967	)		4,422
Total liabilities and stockholders' equity	17,929		$	781		$	18,710

All values are in US Dollars.