Bridgeline Digital Inc

1.** ** Description of Business**

Overview

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

Bridgeline’s software is available through a cloud-based Software as a Service (“SaaS”) model. Additionally, Bridgeline’s software is available via a perpetual licensing business model, in which the software can reside on premise at the customer’s facility, or manage-hosted by Bridgeline. Bridgeline’s product offerings include:

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

● Celebros Search: a commerce-oriented site search product that provides Natural Language Processing with artificial intelligence to present relevant search results based on long-tail keyword searches.

● Woorank: a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO.

● Unbound: a Digital Experience Platform that includes Web Content Management, eCommerce, Digital Marketing, and Web Analytics.

● TruPresence: a web content management and eCommerce platform that supports the needs of multi-unit organizations and franchises.

● OrchestraCMS: the only content and digital experience platform built100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees.

Bridgeline Digital was incorporated under the laws of the State of Delaware on* August 28, 2000.*

The Company hasfour wholly-owned subsidiaries: Bridgeline Digital Pvt. Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium.

The Company’s corporate headquarters is located in Woburn, Massachusetts. The Company maintains regional field offices serving the following geographical locations: Woodbury, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium.

Liquidity and Management’s Plans

The Company has historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. The Company is continuing to maintain tight control over discretionary spending for the2025 fiscal year. The Company believes that future revenues and cash flows will supplement its working capital and it has an appropriate cost structure to support future revenue growth.

The Company* mayoffer and sell, from time to time, inone* or more offerings, up to $50 million of its debt or equity securities, or any combination thereof. Such securities offerings* maybe made pursuant to the Company’s currently effective registration statement on Form S-3 (FileNo.* 333-262764), which was initially filed with the Securities and Exchange Commission on* February 16, 2022and declared effective on March 4, 2022 (the “Shelf Registration Statement”). A complete description of the types of securities that the Company maysell is described in the Preliminary Prospectus contained in the Shelf Registration Statement. As of the date of the filing of this Quarterly Report, there areno* active offerings for the sale or obligations to purchase any of the Company’s securities pursuant to the Shelf Registration Statement. There can beno assurances that the Company will offer any securities for sale or that if the Company does offer any securities that it will be successful in selling any portion of the securities offered on a timely basis if at all, or on terms acceptable to us. Further, our ability to offer or sell such securities* may*be limited by rules of the NASDAQ Capital Market.

We are currently evaluating our future financing options, including the filing of a new shelf registration statement to replace our existing Shelf Registration Statement, which is set to expire on* March 4, 2025.A new registration statement would provide us with continued flexibility to access capital and support our business objectives. The decision to file a new registration statement and the timing of any such filing will depend on several factors, including market conditions, our capital requirements, and our eligibility to utilize Form S-3 at the time of filing. There can beno* assurance that we will proceed with filing a new registration statement or that, if filed, it will be declared effective by the SEC.

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2. ** Summary of Significant Accounting Policies**

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and with the instructions to Form10-Q and Regulation S-X, and in the opinion of the Company’s management, these condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, necessary for their fair presentation. The operating results for thethree months ended* December 31, 2024* arenot necessarily indicative of the results to be expected for the year ending* September 30, 2025.The accompanying September 30, 2024* Condensed Consolidated Balance Sheet has been derived from the audited financial statements at that date but doesnot include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form10-K for the year ended* September 30, 2024*, filed with the Securities and Exchange Commission (“SEC”) on* December 26,*2024.

Recently Adopted Accounting Pronouncements

Segment Reporting

In* November 2023,the FASB issued ASUNo.* 2023-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures,* which requires that an entity report segment information in accordance with Topic280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this Update are effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.*The Company is currently evaluating the impact of the new standard on its consolidated financial statements which is expected to result in enhanced disclosures.

Accounting Pronouncements Pending Adoption

Income Taxes

In* December 2023,the FASB issued ASUNo.* 2023-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures,* which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for annual periods beginning after* December 15, 2024.*The Company is currently evaluating the impact of the new standard on its consolidated financial statements which is expected to result in enhanced disclosures.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses,which requires that an entity disclose, in the notes to financial statements, specified information about certain costs and expenses. The amendment in the ASU is intended to enhance the transparency and decision usefulness to better understand the major components of an entity’s income statement. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026,and interim reporting periods beginning after December 15, 2027.*The Company is currently evaluating the impact of the new standard on its consolidated financial statements which is expected to result in enhanced disclosures.

All other Accounting Standards Updates issued butnot yet effective arenot expected to have a material effect on the Company’s future consolidated financial statements or related disclosures.

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3. ** ** Accounts Receivable

Accounts receivable consist of the following:

As of* December 31, 2024* and* September 30, 2024*, no customer exceeded10% of accounts receivable.

Allowance for Credit Losses

The following illustrates the activity in our allowance for credit losses on accounts receivable:

4. Fair Value Measurement and Fair Value of Financial Instruments

The Company’s financial instruments consist principally of accounts receivable, accounts payable, warrant liabilities, and long-term debt arrangements. The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, under U.S. GAAP, companies are required to provide disclosure and categorize assets and liabilities measured at fair value intoone ofthree different levels depending on the assumptions (i.e., inputs) used in the valuation. Level1 provides the most reliable measure of fair value while Level3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

Level1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level2—Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that arenot active for which significant inputs are observable, either directly or indirectly.

Level3—Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The carrying value of the Company’s accounts receivable and accounts payable approximates fair value due to their short-term nature. As of* December 31, 2024* and* September 30, 2024*, the aggregate fair values of long-term debts were $0.4 million and $0.5 million, respectively, with an aggregate carrying value of $0.4 million and $0.5 million, respectively. The fair value is based on interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities. If measured at fair value in the financial statements, the debt would be classified as Level2 in the fair value hierarchy.

The Company’s warrant liabilities are measured at fair value at each reporting period with changes in fair value recognized in earnings during the period. The fair value of the Company’s warrant liabilities are valued utilizing Level3 inputs. Warrant liabilities are valued using a Monte Carlo option-pricing model, which takes into consideration the volatilities of comparable public companies, due to the relatively low trading volume of the Company’s common stock. The Monte Carlo option-pricing model uses certain assumptions, including expected life and annual volatility. The range and weighted average volatilities of comparable public companies utilized was 21.4% -62.1% and 39.8%, respectively, as of* December 31, 2024*, and 21.0% -55.0% and 40.3%, respectively, as of* September 30, 2024*. The volatility utilized in the Monte Carlo option-pricing model was determined by weighing 60% to the Company-specific volatility and 40% on comparable public companies. The significant inputs and assumptions utilized were as follows:

The Company recognized a loss of $(114) thousand and a gain of $18 thousand for thethree months ended* December 31, 2024and2023*, respectively, related to the change in fair value of warrant liabilities. The changes in fair value of warrant liabilities were due to changes in inputs, primarily a change in the stock price, to the Monte Carlo option-pricing model.

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Assets and Liabilities of the Company measured at fair value on a recurring basis as of* December 31, 2024* and* September 30, 2024*, are as follows:

The following table provides a rollforward of the fair value, as determined by Level3 inputs, as follows:

5. ** Intangible Assets**

The components of intangible assets, net of accumulated amortization, are as follows:

Total amortization expense was $184 thousand and $346 thousand related to intangible assets for thethree months ended* December 31, 2024and2023*, respectively, and is reflected in operating expenses on the Condensed Consolidated Statements of Operations. The estimated amortization expense for fiscal year2025 (remaining),2026, 2027, 2028, 2029 and thereafter is $544, $669, $553, $554, $494 and $911 thousand, respectively.

6. Accrued Liabilities

Accrued liabilities consist of the following:

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7. ** Long-term Debt**

On* March 1, 2021,the Company assumed the outstanding long-term debt obligations of an acquired business and issued a seller note toone* of the selling shareholders. The assumed debt obligations and seller note are denominated in Euros.

Long-term debt consisted of the following:

At* December 31, 2024*, future maturities of long-term debt are as follows:

8. Stockholders’** Equity**

Under our Certificate of Incorporation, we are authorized, subject to limitations prescribed by Delaware law and our Charter, to issue up to 1,000,000 shares of preferred stock inone 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, butnot 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.

Series C Convertible Preferred Stock

The Company has designated 11,000 shares of its preferred stock as Series C Convertible Preferred Stock (“Series C Preferred Stock”). The shares of Series C Preferred Stock** may** be converted, at the option of the holder at any time, into such number of shares of common stock equal to (i) the number of shares of Series C Preferred Stock to be converted, multiplied by the stated value of $1,000 and (ii) divided by the conversion price in effect at the time of conversion. Series C Preferred Stock vote on an as-converted basis along with shares of the Company’s common stock, arenot entitled to receive dividends, unless specifically declared by our Board of Directors, and in the event of any liquidation, dissolution or winding up of the Company the holders of Series C Preferred Stock are entitled to receive in preference to the holders of common stock, Series A Preferred Stock, Series B Preferred Stock and any other stock, the amount equal to the stated value per share of Series C Preferred Stock. The Company* maynot* effect, and a holder willnot be entitled to, convert the Series C Preferred Stock or exercise any Series C Preferred Warrants, which, upon giving effect to such conversion or exercise, would cause the aggregate number of shares of common stock beneficially owned by the Purchaser (together with its affiliates) to exceed4.99% (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. As of* December 31, 2024* and* September 30, 2024,* the Company had 350 shares of Series C Preferred Stock outstanding, which are convertible into an aggregate of 38,889 shares of the Company’s common stock.

Amended and Restated Stock Incentive Plan

The Company has granted common stock, common stock warrants, and common stock option awards (the “Equity Awards”) to employees, consultants, advisors and former debt holders of the Company and to former owners and employees of acquired companies that have become employees of the Company. The Company’s Amended and Restated Stock Incentive Plan (the “Plan”) provided for the issuance of up to 5,000 shares of common stock. This Plan expired in* August 2016.On April 29, 2016,the stockholders approved a new stock incentive plan, the2016* Stock Incentive Plan (the*“2016* Plan”). The2016 Plan authorizes the award of incentive stock options, non-statutory stock options, restricted stock, unrestricted stock, performance shares, stock appreciation rights and any combination thereof to employees, officers, directors, consultants, independent contractors and advisors of the Company. The2016 Plan provides for the issuance in the aggregate of up to 2,400,000 shares of common stock associated with awards granted under the Stock Incentive Plan. As of* December 31, 2024*, there were 2,106,895 options outstanding and approximately 40 thousand shares available for future issuance under the2016 Plan.

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Compensation Expense

Compensation expense is generally recognized on a graded accelerated basis over the vesting period of grants. Compensation expense is recorded in the condensed consolidated statements of operations with a portion charged to Cost of revenue and a portion to Operating expenses, depending on the employee’s department.

During thethree months ended* December 31, 2024and2023*, compensation expense related to share-based payments was as follows:

As of* December 31, 2024*, the Company had approximately $0.4 million of unrecognized compensation costs related to unvested options, which is expected to be recognized over a weighted-average period of 1.2 years.

Common Stock Warrants

The Company typically issues warrants to individual investors and placement agents to purchase shares of the Company’s common stock in connection with public and private placement fund raising activities. Warrants* may*also be issued to individuals or companies in exchange for services provided to the Company. The warrants are typically exercisablesix months after the issue date, expire infive years, and contain a cashless exercise provision and piggyback registration rights.

Montage Warrant - As additional consideration for a prior loan arrangement which was paid in full in a prior periodnot presented, the Company issued to Montage Capital aneight-year warrant (the “Montage Warrant”) to purchase the Company’s common stock at a price equal to $132.50 per share. The Montage Warrant contains an equity buy-out provision upon the earlier of (1) dissolution or liquidation of the Company, (2) any sale or distribution of all or substantially all of the assets of the Company, or (3) a “Change in Control” as defined within the meaning of Sections13(d) and14(d)(2) of the Securities Exchange Act of1934**. Montage Capital has the right to receive an equity buy-out of $250. If the equity buy-out is exercised, the Montage Warrant will be surrendered to the Company for cancellation.

Series A and B and C Preferred Warrants - In* March 2019,in connection with the issuance of the Company’s Series C Preferred Stock, the Company issued warrants to purchase the Company’s common stock. These warrants were designated as (i) Series A Warrants with an initial term of 5.5 years and an exercise price of$4.00; (ii) Series B Warrants, which expired unexercised during the Company’s2021* fiscal year, with an initial term of 24 months and an exercise price of$4.00; and (iii) Series C Warrants with an initial term of 5.5 years and an exercise price of $0.05 (collectively, hereinafter referred to as the “Series C Preferred Warrants”). The Company also issued warrants with an exercise price of $4.00 to purchase shares of the Company’s common stock to the Placement Agents. The Company** may** not effect, and a holder willnot be entitled to convert, the Series C Preferred Stock or exercise any Series C Preferred Warrants, which, upon giving effect to such conversion or exercise, would cause (i) the aggregate number of shares of common stock beneficially owned by the Purchaser (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.

During fiscal2024, all Series A, Series C and Placement Agent Warrants issued in connection with the Series C Preferred Stock and Investor Warrants expired.

Series D Preferred Warrants - In* May 2021,in connection with the issuance of the Company’s Series D Preferred Stock, the Company issued warrants to purchase the Company’s common stock. These warrants consisted of (i) warrants issued to investors in Series D Preferred Stock to purchase in the aggregate up to 592,106 shares of common stock with an initial term offive and a half years which ends on November 16, 2026and an initial exercise price of$2.51 and (ii) Placement Agents warrants to purchase an aggregate of 179,536 shares of common stock with an initial term offive years which ends on May 12, 2026*and an initial exercise price of$2.85. Collectively, these warrants are referred to as the “Series D Preferred Warrants.”

The Company* maynot* effect, and a holder willnot be entitled to convert, the Series D Preferred Stock or exercise any Series D Preferred Warrants, which, upon giving effect to such conversion or exercise, would cause (i) the aggregate number of shares of common stock beneficially owned by the Purchaser (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. As of* December 31, 2024,* no Series D Warrants have been exercised and the aggregate number of shares issuable upon exercise was 592,106 and 179,536 shares for investors and placement agents, respectively.

The Montage Warrants, Series A and C Preferred Warrants, the Placement Agent Warrants issued in connection with the Series C Preferred Stock, and the Series D Warrants were all determined to be derivative liabilities and are subject to remeasurement each reporting period (see Note4).

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During thethree months ended* December 31, 2024* and2023, there wereno warrants that were exercised.

Total warrants outstanding as* December 31, 2024*, were as follows:

Summary of Option and Warrant Activity and Outstanding Shares

During thethree months ended* December**31,* 2024 and2023, the Company didnot grant any options.

A summary of combined restricted stock, stock option and warrant activity for thethree months ended* December 31, 2024*, is as follows:

As of* December 31, 2024*, the aggregate intrinsic value of options outstanding and exercisable was $596 thousand and $355 thousand, respectively, and the weighted-average remaining contractual term was 7.4 and 7.1 years, respectively.

In* January 2025,*our Chief Executive Officer exercised 25,000 stock options with an exercise price of $0.81.

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9. ** Net Loss Per Share Attributable to Common Shareholders**

Basic net loss per share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding. Diluted net loss per share attributable to common shareholders is computed using the weighted average number of common shares outstanding during the period plus the dilutive effect of outstanding stock options and warrants using the “treasury stock” method and convertible preferred stock using the “as-if-converted” method. The computation of diluted earnings per share doesnot include the effect of outstanding stock options, warrants and convertible preferred stock that are considered anti-dilutive.

Basic and diluted net income (loss) per share is computed as follows:

Potential common stock equivalents excluded from the computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive were as follows (in shares):

10. Revenues and Other Related Items

Disaggregated Revenues

The Company disaggregates revenue from contracts with customers by geography and product grouping, as it believes this best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s revenue by geography (based on customer address) is as follows:

The largest concentration within the Company’s international revenue geography is within Canada.

Long-lived assets located in foreign jurisdictions aggregated approximately $0.9 million and $1.0 million as of* December 31, 2024* and* September 30, 2024*, respectively.

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The Company’s revenue by type is as follows:

For thethree months ended* December 31, 2024and2023*, no single customer exceeded10% of the Company’s total revenue.

Deferred Revenue

Amounts that have been invoiced are recorded in accounts receivable and deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue hasnot yet been recognized. Deferred revenue that is expected to be recognized during the succeeding12-month period is recorded as current deferred revenue, and the remaining portion is recorded as noncurrent deferred revenue included in Other long-term liabilities.

The following table summarizes the classification and net change in deferred revenue as of and for thethree months ended* December 31, 2024*:

11. Income Taxes

Provision for income taxes consists of the estimated liability for state income taxes owed by the Company. Net operating loss carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented. During each of thethree months ended* December 31, 2024and2023*, the Company recognized a provision for income taxes of $5 thousand.

12. Leases

The Company leases facilities in the United States for its corporate and regional field offices. During thethree months ended* December 31, 2024* and2023, the Company was also a lessee/sublessor for certain office locations. During the quarter ended* December 31, 2023,the Company remeasured its operating lease liability forone* its sublet locations as a result of a change in the expected lease term. Such remeasurement resulted in an adjustment to the operating lease asset of less than $0.1 million, which approximated to the amount in which the operating lease liability was remeasured.

The components of net lease costs were as follows:

Cash paid for amounts included in the measurement of lease liabilities was $37 thousand and $174 thousand for thethree months ended* December 31, 2024and2023*, all of which represents operating cash flows from operating leases. As of* December 31, 2024*, the weighted average remaining lease term was 0.7 years and the weighted average discount rate was 9.0%.

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At* December 31, 2024*, future minimum rental commitments under non-cancelable leases with initial or remaining terms in excess ofone year were as follows:

As of* December 31, 2024*, the Company hadno lease commitments that extend past fiscal2028, assuming the Company doesnot exercise its termination option in2025. The Rosemont, Illinois lease contains an early termination clause, which the Company expects to execute, under which the lease can be terminated on* August 31, 2025*upon payment of a $93 thousand termination fee.

Starting* October 1, 2023,the Company has subleased its office space in Rosemont, Illinois. The sublease is for $6 thousand per month, through August 31, 2025.*

13. Commitments and Contingencies

The Company leases certain of its buildings under non-cancelable lease agreements. Refer to theLeases footnote (Note12) of the Notes to the Condensed Consolidated Financial Statements for additional information.

The Company frequently warrants that the technology solutions it develops for its clients will operate in accordance with the project specifications without defects for a specified warranty period, subject to certain limitations that the Company believes are standard in the industry. In the event that defects are discovered during the warranty period, andnone of the limitations apply, the Company is obligated to remedy the defects until the solution that the Company provided operates within the project specifications. The Company isnot typically obligated by contract to provide its clients with any refunds of the fees they have paid, although a small number of its contracts provide for the payment of liquidated damages upon default. The Company has purchased and maintains insurance policies covering professional errors and omissions, property damage and general liability that reduce its monetary exposure for warranty-related claims and enable it to recover a portion of any future amounts paid.

The Company’s contracts typically provide for testing and client acceptance procedures that are designed to mitigate the likelihood of warranty-related claims, although there can beno assurance that such procedures will be effective for each project. The Company hasnot paid any material amounts related to warranties for its solutions. The Company sometimes commits unanticipated levels of effort to projects to remedy defects covered by its warranties. The Company’s estimate of its exposure to warranties on contracts is immaterial as of* December 31, 2024* and* September 30, 2024*.

The Company’s agreements with customers generally require the Company to indemnify the customer against claims in which the Company’s products infringethird-party patents, copyrights, or trademarks and indemnify against product liability matters. As of* December 31, 2024* and* September 30, 2024*, the Company hasnot experienced any losses related to the indemnification obligations andno significant claims with respect thereto were outstanding. The Company doesnot expect significant claims related to the indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, andno related reserves were established.

Litigation

The Company is subject to ordinary routine litigation and claims incidental to its business. As of* December 31, 2024*, the Company wasnot engaged with any material legal proceedings.

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14. Related Party Transactions

In* October 2013,*Michael Taglich joined the Board of Directors. Mr. Taglich is the Chairman and President of Taglich Brothers, Inc. (“Taglich Brothers”), a New York based securities firm. Taglich Brothers acted as placement agents for many of the Company’s private offerings and debt issuances.

In connection with previous private offerings and debt issuances which occurred prior to the fiscal years presented in these condensed consolidated financial statements, Taglich Brothers were granted Placement Agent Warrants to purchase 4,246 shares of common stock at a weighted average price of $321.00 per share and were granted Placement Agent Warrants to purchase 10,926 shares of common stock at a weighted average price of $761.61 per share.

In consideration of previous loans made by Mr. Taglich to the Company and the personal guaranty on a formerthird-party credit facilityno longer maintained by the Company, Mr. Taglich has been issued warrants to purchase common stock totaling 1,080 shares at an exercise price of $1,000 per share.

In* November 2018,the Company engaged Taglich Brothers Inc, on a non-exclusive basis, to perform advisory and investment banking services to identify possible acquisition target possibilities. Fees for the services were $8 thousand per month forthree* months and $5 thousand per month thereafter, cancellable at any time. Taglich Brothers could also earn a success fee ranging from $200 thousand for a revenue target acquisition of under*$5* million up to $1 million for an acquisition target over*$200* million. In connection with the asset purchase of Stantive, Taglich Brothers earned a success fee of $200,000. The services agreement isno longer in place.

Mr. Taglich purchased 350 units in the amount of $350 of Series C Preferred Stock and associated warrants in the private transaction consummated on* March 13, 2019.Mr. Taglich’s purchase was subject to stockholder approval pursuant to The Nasdaq Stock Market Listing Rule5635*(c), for which approval by the stockholders of the Company was obtained on* April 26, 2019.*

In connection with the Company’s registered direct offering completed in* February 2021,the Company issued Taglich Brothers 29,084 Investors warrants. Each warrant to purchase common stock expires five years from the date of issuance and is non-cash exercisable for $3.875 per share beginningsix*-months from the date of issuance, or* February 4,2021. The warrants expire February 4, 2026.*

In connection with the Company’s Series D Preferred Stock registered direct offering and PIPE completed in* May 2021,the Company issued Taglich Brothers 53,861 Investors warrants. Each warrant to purchase common stock expires five years from the date of issuance and is non-cash exercisable for $2.850 per share beginningsix*-months from the date of issuance, or* May 14,2021. The warrants expire May 12, 2026.*

15. ** Subsequent Events**

The Company evaluated subsequent events through the date of this filing and concluded there wereno material subsequent events requiring adjustment to or disclosure in these interim condensed consolidated financial statements.

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