Item 1.01. Entry into a Material Definitive Agreement.
On
October 16, 2018, Bridgeline Digital, Inc., a Delaware corporation
(the “
Company
”), entered into an
underwriting agreement (the “
Underwriting Agreement
”) with
ThinkEquity, a division of Fordham Management, Inc. (the
“
Underwriter
”),
pursuant to which the Company agreed to issue and sell to the
Underwriter in a firm commitment underwritten public offering (the
“
Offering
”) an
aggregate of (i) 1,424,000 Class A Units (the “
Class A Units
”) at a public
offering price of $0.50 per Class A Unit, with each Class A Unit
consisting of one share of the Company’s common stock, par
value $0.001 per share (“
Common Stock
”), and one five-year
warrant to purchase one share of Common Stock at an exercise price
of $0.50 per share, an amount equal to the public offering price of
the Class A Units (each a “
Warrant
” and collectively, the
“
Warrants
”),
and (ii) 4,288 Class B Units (the “
Class B Units,
” and together with
the Class A Units, the “
Units
”) at a public offering
price of $1,000 per Class B Unit, with each Class B Unit consisting
of one share of the Company’s newly designated Series B
Convertible Preferred Stock, par value $0.001 per share
(“
Series B
Preferred
”), with a stated value of $1,000
(“
Stated
Value
”) and convertible into that number of shares of
Common Stock equal to the Stated Value divided by a conversion
price of $0.50 per share, with all shares of Series B Preferred
Stock convertible into an aggregate of 8,576,000 shares of Common
Stock together with Warrants to purchase 8,576,000 shares of Common
Stock.
In
addition, pursuant to the Underwriting Agreement, the Company
granted the Underwriter a 45-day option (the “
Over-allotment Option”)
to
purchase up to an additional 1,500,000 shares of Common Stock
and/or additional Warrants to purchase an additional 1,500,000
shares of Common Stock. The Underwriter partially exercised the
Over-allotment Option by electing to purchase from the Company
additional Warrants to purchase 400,000 shares of Common Stock. The
Offering, including the Warrants purchased in the partial exercise
of the over-allotment option, closed on October 19, 2018. The Units
were not certificated and the shares of Common Stock, Series B
Preferred Stock and Warrants comprising the Units are immediately
separable and were issued separately in the Offering.
The
Units were offered by the Company pursuant to a registration
statement on Form S-1 (File No. 333-227430), as amended,
filed with the Securities and Exchange Commission (the
“
Commission
”),
which was declared effective by the Commission on October 16, 2018
(the “
Registration
Statement
”).
The
conversion price of the Series B Preferred Stock and exercise
price of the Warrants is subject to appropriate adjustment in the
event of recapitalization events, stock dividends, stock splits,
stock combinations, reclassifications, reorganizations or similar
events affecting the Company’s Common Stock.
The
Warrants are immediately exercisable at a price of $0.50 per share
of Common Stock, a price equal to the public offering price of the
Class A Units, and will expire on October 19, 2023. 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 Warrants may
only be exercised through a cashless exercise. No fractional shares
of Common Stock will be issued in connection with the exercise of a
Warrant. In lieu of fractional shares, the holder will receive an
amount in cash equal to the fractional amount multiplied by the
fair market value of any such fractional shares. In addition,
so long as at least 25% of the
Warrants issued in the Offering remain outstanding, the Company
will be prohibited from issuing shares of Common Stock or common
stock equivalents (or combinations of units thereof) involving a
Variable Rate Transaction (as such term is defined in the
Warrants);
provided,
however
, that such prohibition
may be waived upon written consent of the holders of at least 80%
of the Warrants then outstanding.
The
Company may not effect, and holder will not be entitled to,
exercise any Warrant or conversion of the Series B Preferred Stock,
which, upon giving effect to such exercise, would cause (i) the
aggregate number of shares of Common Stock beneficially owned by
the holder (together with its affiliates) to exceed 4.99% (or, at
the election of the holder, 9.99%) of the number of shares of
Common Stock outstanding immediately after giving effect to the
exercise, or (ii) the combined voting power of the Company’s
securities beneficially owned by the holder (together with its
affiliates) to exceed 4.99% (or, at the election of the holder,
9.99%) of the combined voting power of all of the Company’s
securities then outstanding immediately after giving effect to the
exercise or conversion, as such percentage ownership is determined
in accordance with the terms of the Warrants or Series B Preferred
Stock. 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.
The net
proceeds to the Company from the Offering, after deducting the
Underwriter’s fees and expenses, the Company’s
estimated Offering expenses and the repayment of certain term
notes, and excluding the proceeds, if any, from the exercise of the
Warrants issued in the Offering, were approximately $3.4
million. The Company intends to utilize the remaining net
proceeds for research and development, working capital needs,
capital expenditures and other general corporate purposes. In
addition, the Company may use a portion of the net proceeds to
pursue potential strategic acquisitions, although the Company does
not currently have any specific plans or arrangements to do
so.
The
Underwriting Agreement contains representations and warranties that
the parties made to, and solely for the benefit of, the other in
the context of all of the terms and conditions of that agreement
and in the context of the specific relationship between the
parties. The provisions of the Underwriting Agreement,
including the representations and warranties contained therein, are
not for the benefit of any party other than the parties to such
agreements and are not intended as documents for investors and the
public to obtain factual information about the current state of
affairs of the parties to those documents and agreements. Rather,
investors and the public should look to other disclosures contained
in the Company’s filings with the Securities and Exchange
Commission.
The
foregoing summaries of the terms of the Underwriting Agreement and
the Warrants are subject to, and qualified in their entirety by
reference to, the Underwriting Agreement and the form of Warrant,
which are attached to this Current Report on Form 8-K as Exhibits
1.1, and 4.1, respectively, and are incorporated herein by
reference.