Attached files
| file | filename |
|---|---|
| 8-K - BRIDGELINE DIGITAL, INC. (MAY 11, 2010) - Bridgeline Digital, Inc. | form8-k_16869.htm |
| EX-99.1 - AUDITED FINANCIALS - Bridgeline Digital, Inc. | exh99-1_16869.htm |
EXHIBIT 99.2
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
|
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
|
|
|
Pro forma Combined Condensed Financial information of Bridgeline Digital, Inc. (unaudited)
|
F-22
|
|
Pro Forma Combined Condensed Balance Sheet as of March 31, 2010 (unaudited)
|
F-23
|
|
Pro Forma Combined Condensed Statements of Operations for the Six Months Ended March 31, 2010 (unaudited)
|
F-24
|
|
Pro Forma Combined Condensed Statements of Operations for the Year Ended September 30, 2009 (unaudited)
|
F-25
|
|
Notes and Assumptions to Pro Forma Combined Condensed Financial Information (unaudited)
|
F-26
|
F-21
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
On May 11, 2010, Bridgeline Digital, Inc. (“Bridgeline”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with TMX Interactive, Inc., a Delaware corporation (“TMX”) and completed the acquisition of certain assets and the assumption of certain liabilities of TMX (the ‘Acquistion”).
The Purchase Agreement sets forth the terms and conditions pursuant to which Bridgeline acquired substantially all the assets and assumed certain liabilities of TMX. The purchase price consisted of (i) cash of $100,000, (ii) the assumption of approximately $600,000 of deferred revenue, (iii) the issuance of a subordinated promissory note in the amount of $500,000 payable over three years beginning January 2011 with interest at a rate of 1% per annum, and (iv) contingent consideration of up to $500,000, payable in cash quarterly over the 12 consecutive calendar quarters beginning with the quarter ending December 31, 2010, based on the achievement of quarterly revenue of $600,000. The note is unsecured and subordinated to the Company's primary lender. To the extent the revenue target is not met in any particular quarter, the earnout period will be extended for up to four additional quarters.
The following unaudited pro forma combined condensed balance sheet as of March 31, 2010 and unaudited pro forma combined condensed statements of operations for the six months ended March 31, 2010 and the year ended September 30, 2009 (collectively, the "Unaudited Pro Forma Statements") were prepared to give effect to the Acquisition accounted for under the purchase method of accounting. The unaudited pro forma combined condensed balance sheet assumes that the Acquisition occurred on March 31, 2010. The unaudited pro forma combined condensed statements of operations for the six months ended March 31, 2010, and for the year ended September 30, 2009 assumes that the Acquisition occurred on October 1, 2008. The Unaudited Pro Forma Statements are based on the historical consolidated financial statements of Bridgeline and TMX under the assumptions and adjustments set forth in the accompanying notes to the Unaudited Pro Forma Statements. The combined financial information for the fiscal years ended September 30, 2009 has been obtained from the consolidated financial statements of Bridgeline for the year ended September 30, 2009 and the financial statements of TMX for the year ended December 31, 2009. The combined financial information for the six months ended March 31, 2010 has been obtained from the unaudited consolidated financial statements of Bridgeline and TMX and includes, in the opinion of Bridgeline and TMX’s management, all adjustments necessary to present fairly the data for such period. The Unaudited Pro Forma Statements may not be indicative of the results that actually would have occurred if the Acquisition had been in effect on the dates indicated or which may be obtained in the future.
The pro forma adjustments are based upon available information and upon certain assumptions as described in the notes to the Unaudited Pro Forma Statements that Bridgeline's management believes are reasonable in the circumstances. The purchase price has been allocated to the acquired assets and liabilities based on a preliminary estimate of their respective values. Although Bridgeline believes, based on available information, that the fair values and allocation of the purchase price included in the Unaudited Pro Forma Statements are reasonable estimates, final purchase accounting adjustments will be made on the basis of evaluations and estimates which are in progress, but have not yet been finalized. As a result, final allocation of costs related to the Allocation may differ from that presented herein. The Unaudited Pro Forma Statements and accompanying notes should be read in conjunction with the consolidated financial statements and accompanying notes thereto of Bridgeline included in its Annual Report on Form 10-K for the year ended September 30, 2009 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.
F-22
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MARCH 31, 2010
(IN THOUSANDS)
(UNAUDITED)
|
Bridgeline
|
TMX
Assets
Acquired
&
Liabilities
Assumed
|
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||||
|
(a)
|
|||||||||||||||||
|
Assets
|
|||||||||||||||||
|
Current assets:
|
|||||||||||||||||
|
Cash and cash equivalents
|
$
|
3,293
|
$
|
3
|
$
|
(418
|
)
|
(b)
|
$
|
2,878
|
|||||||
|
Accounts receivable and unbilled receivables, net
|
3,724
|
234
|
—
|
3,958
|
|||||||||||||
|
Prepaid expenses and other current assets
|
367
|
44
|
—
|
411
|
|||||||||||||
|
Total current assets
|
7,384
|
281
|
(418
|
)
|
7,247
|
||||||||||||
|
Equipment and improvements, net
|
1,210
|
3
|
—
|
1,213
|
|||||||||||||
|
Intangible assets, net
|
1,207
|
81
|
(c)
|
105
|
(c)
|
1,393
|
|||||||||||
|
Goodwill, net
|
14,656
|
725
|
(c)
|
951
|
(c)
|
16,332
|
|||||||||||
|
Other assets
|
921
|
16
|
—
|
937
|
|||||||||||||
|
Total assets
|
25,378
|
1,106
|
638
|
27,122
|
|||||||||||||
|
Liabilities and Stockholders’ Equity
|
|||||||||||||||||
|
Current liabilities:
|
|||||||||||||||||
|
Accounts payable
|
729
|
203
|
(59
|
)
|
(b)
|
873
|
|||||||||||
|
Accrued liabilities
|
756
|
72
|
(72
|
)
|
(b)
|
756
|
|||||||||||
|
Accrued earnouts
|
287
|
—
|
83
|
(b)
|
370
|
||||||||||||
|
Deferred revenue
|
1,139
|
644
|
—
|
1,783
|
|||||||||||||
|
Line of credit
|
1,650
|
187
|
(187
|
)
|
(b)
|
1,650
|
|||||||||||
|
Current portion of debt
|
—
|
—
|
83
|
(b)
|
83
|
||||||||||||
|
Current portion of capital leases
|
49
|
—
|
—
|
49
|
|||||||||||||
|
Total current liabilities
|
4,610
|
1,106
|
(152
|
)
|
5,564
|
||||||||||||
|
Accrued earnouts
|
—
|
—
|
373
|
(b)
|
373
|
||||||||||||
|
Other long-term liabilities
|
411
|
—
|
—
|
411
|
|||||||||||||
|
Long-term debt, net of current portion
|
—
|
—
|
417
|
(b)
|
417
|
||||||||||||
|
Capital leases, net of current portion
|
48
|
—
|
—
|
48
|
|||||||||||||
|
Total liabilities
|
5,069
|
1,106
|
638
|
6,813
|
|||||||||||||
|
|
|
||||||||||||||||
|
Commitments and contingencies
|
|||||||||||||||||
|
Stockholders’ equity
|
|||||||||||||||||
|
Preferred stock
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Common stock
|
11
|
—
|
—
|
11
|
|||||||||||||
|
Additional paid-in capital
|
35,798
|
—
|
—
|
35,798
|
|||||||||||||
|
Accumulated deficit
|
(15,371)
|
—
|
—
|
(15,371
|
|||||||||||||
|
Accumulated other comprehensive income
|
(129)
|
—
|
—
|
(129)
|
|||||||||||||
|
Total stockholders’ equity
|
20,309
|
—
|
—
|
20,309
|
|||||||||||||
|
Total liabilities and stockholders’ equity
|
$
|
25,378
|
$
|
1,106
|
$
|
638
|
$
|
27,122
|
|||||||||
See accompanying notes to the pro forma combined condensed financial information
F-23
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2010
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
|
Bridgeline
|
TMX
|
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
||||||||||
|
Total revenue
|
$
|
10,866
|
$
|
1,046
|
$
|
—
|
|
$
|
11,912
|
|||||
|
Total cost of revenue
|
5,039
|
457
|
13
|
(d)
|
5,509
|
|||||||||
|
Gross profit
|
5,827
|
589
|
(13
|
)
|
6,403
|
|||||||||
|
Operating expenses:
|
||||||||||||||
|
Sales, general and administrative
|
4,621
|
963
|
(20
|
)
|
5,564
|
|||||||||
|
Research and development
|
325
|
—
|
—
|
325
|
||||||||||
|
Depreciation and amortization
|
609
|
9
|
13
|
631
|
||||||||||
|
Total operating expenses
|
5,555
|
972
|
(7
|
)
|
(e)
|
6,520
|
||||||||
|
Income from operations
|
272
|
(383
|
)
|
(6
|
)
|
(117
|
)
|
|||||||
|
Interest income (expense), net
|
(1
|
)
|
(1,320
|
)
|
1,318
|
(f)
|
(3
|
)
|
||||||
|
Income before income taxes
|
271
|
(1,703
|
)
|
1,312
|
(120
|
)
|
||||||||
|
Income taxes
|
31
|
|
—
|
—
|
31
|
|||||||||
|
Net income
|
$
|
240
|
$
|
(1,703
|
)
|
$
|
1,312
|
|
(151
|
)
|
||||
|
Net income per share:
|
||||||||||||||
|
Basic
|
$
|
0.02
|
$
|
—
|
$
|
—
|
$
|
(0.01)
|
||||||
|
Diluted
|
$
|
0.02
|
$
|
—
|
$
|
—
|
$
|
(0.01)
|
||||||
|
Number of weighted average shares:
|
||||||||||||||
|
Basic
|
11,184,156
|
—
|
—
|
11,184,156
|
||||||||||
|
Diluted
|
11,650,060
|
—
|
—
|
11,650,060
|
||||||||||
See accompanying notes to the pro forma combined condensed financial information
F-24
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
|
Bridgeline
|
TMX
|
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||
|
Total revenue
|
$
|
23,901
|
$
|
2,230
|
$
|
—
|
$
|
26,131
|
|||||||
|
Total cost of revenue
|
10,533
|
1,479
|
26
|
(d)
|
12,038
|
||||||||||
|
Gross profit
|
13,368
|
751
|
(26
|
)
|
14,093
|
||||||||||
|
Operating expenses:
|
|||||||||||||||
|
Sales, general and administrative
|
10,193
|
2,313
|
(21
|
)
|
(e)
|
12,485
|
|||||||||
|
Research and development
|
1,124
|
—
|
—
|
1,124
|
|||||||||||
|
Depreciation and amortization
|
1,222
|
34
|
25
|
1,281
|
|||||||||||
|
Total operating expenses
|
12,539
|
2,347
|
4
|
|
14,890
|
||||||||||
|
Income from operations
|
829
|
(1,596
|
)
|
(30
|
)
|
(797
|
)
|
||||||||
|
Interest income (expense), net
|
(40
|
)
|
(2,480
|
)
|
2,476
|
(f)
|
(44
|
)
|
|||||||
|
Income before income taxes
|
789
|
(4,076
|
)
|
2,446
|
(841
|
)
|
|||||||||
|
Income taxes
|
31
|
|
—
|
—
|
31
|
||||||||||
|
Net income
|
$
|
758
|
$
|
(4,076
|
)
|
$
|
2,446
|
$
|
(872
|
)
|
|||||
|
Net income per share:
|
|||||||||||||||
|
Basic
|
$
|
.07
|
$
|
—
|
$
|
—
|
$
|
(0.08
|
)
|
||||||
|
Diluted
|
$
|
.07
|
$
|
—
|
$
|
—
|
$
|
(0.08
|
)
|
||||||
|
Number of weighted average shares:
|
|||||||||||||||
|
Basic
|
11,008,879
|
—
|
—
|
11,008,879
|
|||||||||||
|
Diluted
|
11,272,190
|
—
|
—
|
11,272,190
|
|||||||||||
See accompanying notes to the pro forma combined condensed financial information
F-25
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
NOTES AND ASSUMPTIONS TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(UNAUDITED)
|
1.
|
General
|
The pro forma information presented is theoretical in nature and not necessarily indicative of the future consolidated results of operations of the combined companies or the consolidated results of operations which would have resulted had the Acquisition taken place during the periods presented. The Unaudited Pro Forma Statements reflect the effects of the Acquisition. The unaudited pro forma combined condensed balance sheet assumes that the Acquisition and related events occurred as of March 31, 2010. The unaudited pro forma combined condensed statements of operations for the six months ended March 31, 2010 and for the year ended September 30, 2009 assume that Acquisition and related events occurred as of October 1, 2008.
|
2.
|
Pro Forma Combined Condensed Balance Sheet Adjustments
|
|
(a)
|
TMX Net Assets Acquired
|
The estimated fair value of net assets acquired and liabilities assumed from the Acquisition of TMX and included in the pro forma adjustments are summarized as follows:
|
Amount
|
||||
|
Net assets acquired
|
||||
|
Assets acquired:
|
||||
|
Cash
|
$ | 3 | ||
|
Accounts receivable, net
|
234 | |||
|
Other current assets
|
44 | |||
|
Equipment and improvements
|
3 | |||
|
Other assets
|
16 | |||
|
Total assets acquired
|
300 | |||
|
Liabilities assumed:
|
||||
|
Accounts payable
|
203 | |||
|
Accrued liabilities
|
72 | |||
|
Deferred revenue
|
644 | |||
|
Line of credit
|
187 | |||
|
Total liabilities assumed
|
1,106 | |||
|
Net assets acquired (liabilities assumed)
|
$ | (806 | ) | |
|
(b)
|
Purchase Price
|
The purchase price for TMX included in the pro forma adjustments was determined as follows:
|
Amount
|
||||
|
Purchase price:
|
||||
|
Cash paid
|
$ | 100 | ||
|
Subordinated promissory note
|
500 | |||
|
Earnout (as adjusted)
|
456 | |||
|
Total purchase price
|
1,056 | |||
|
Net assets acquired (liabilities assumed)
|
(806 | ) | ||
|
Excess of purchase price over fair value of net assets acquired
|
$ | 1,862 | ||
Other acquisition related payments made by Bridgeline at the time of the TMX Acquisition and included in the pro forma adjustments consisted of the following:
|
Amount
|
||||
|
Other acquisition related payments:
|
||||
|
Payment of rent related to the renegotiated office space lease
|
$ | 59 | ||
|
Payment of employee related liabilities
|
37 | |||
|
Payment of seller transaction costs
|
35 | |||
|
Payoff of line of credit
|
187 | |||
|
Total intangible assets and goodwill
|
$ | 318 | ||
F-26
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
NOTES AND ASSUMPTIONS TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The earnout payable pursuant to the acquisition agreement in the amount of $500 has been reduced by $44 to a total of $456. This earnout reduction is based on the amount by which the actual deferred revenue of $644 at the acquisition date exceeds the maximum amount of deferred revenue agreed to be assumed by Bridgeline of $600.
Effective October 1, 2009, the Company accounts for contingent acquisition payments for completed acquisitions at the acquisition date as additional purchase price which is allocated to goodwill and intangible assets. Effective October 1, 2009, all acquisition costs are expensed when incurred.
|
(c)
|
Intangibles Assets and Goodwill
|
Intangibles and goodwill resulting from the TMX Acquisition and included in the Pro Forma Combined Condensed Balance Sheet are as follows:
|
Amount
|
||||
|
Intangible assets and goodwill:
|
||||
|
Intangible assets
|
||||
|
Customer relationships
|
$ | 93 | ||
|
Non compete
|
93 | |||
|
Total intangible assets
|
186 | |||
|
Goodwill
|
1,676 | |||
|
Total intangible assets and goodwill
|
$ | 1,862 | ||
For purposes of the pro forma combined financial statements, $186 of the excess of the purchase price over the fair value of net assets acquired has been allocated to intangible assets and $1,676 of such excess has been allocated to goodwill. Of the $186 allocated to intangible assets, $93 has been allocated to customer relationships and $93 has been allocated to non compete agreements with average useful lives of five years. Such amounts will be adjusted when the formal valuation is completed, anticipated to be in August of 2010.
Amounts recorded for intangible assets and goodwill will be deductible for tax purposes over 15 years. However, such amounts have not been tax affected for purposes of the pro forma combined financial statements because Bridgeline is utilizing net operating loss carryforwards to offset taxable income and is recording only minimum amounts due. Deductions related to intangible assets and goodwill will not affect the estimated minimum Federal and state tax amounts due.
F-27
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
NOTES AND ASSUMPTIONS TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(UNAUDITED)
|
3.
|
Pro Forma Combined Condensed Statements of Operations Adjustments
|
The pro forma combined condensed statements of operations for the six months ended March 31, 2010 and for the year ended September 30, 2009 included the following pro forma adjustments:
|
Pro Forma Adjustments to Combined Condensed Statement of Operations:
|
Six Months
Ended
March 31,
2010
|
Year Ended
September 30,
2009
|
||||||
|
Cost of revenue:
|
||||||||
|
Increase in stock compensation expense related to issuance of options
|
$ | 13 | $ | 26 | ||||
|
Total cost of revenue
|
(d) | 13 | 26 | |||||
|
Operating expenses:
|
||||||||
|
Increase in stock compensation expense related to issuance of options
|
26 | 53 | ||||||
|
Decrease in rent expense related to renegotiated lease
|
(46 | ) | (74 | ) | ||||
|
Subtotal
|
(20 | ) | (21 | ) | ||||
|
Increase in amortization of intangibles assets, net of savings from amortization of patent not assumed
|
13 | 25 | ||||||
|
Total operating expenses
|
(e) | (7 | ) | 4 | ||||
|
Interest:
|
||||||||
|
Decrease in interest expense related to debt not assumed, offset by increase in interest expense related to issuance of subordinated promissory note
|
(f) | 1,318 | (2,476 | ) | ||||
|
Total Pro Forma Increase in Net Income
|
$ | 1,312 | $ | (2,446 | ) | |||
F-28
BRIDGELINE DIGITAL, INC. AND TMX INTERACTIVE, INC.
NOTES AND ASSUMPTIONS TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(UNAUDITED)
|
4.
|
Adjustments Not Included in the Pro Forma Combined Condensed Statements of Operations
|
During the year ended December 31, 2009 (prior to the TMX Acquisition), TMX reduced staffing levels and reduced other operating expenses to more appropriately align costs with revenue. Subsequent to the TMX Acquisition Bridgeline (i) further adjusted staffing levels to more appropriately align staffing with expected revenue and (ii) reduced and plans to further reduce other operating expenses deemed to be redundant. The full impact of such adjustments have not been included in the accompanying Pro Forma Combined Condensed Statements of Operations for the six months ended March 31, 2010 or for the year ended September 30, 2009. Had the full impact of such adjustments been realized effective October 1, 2008, the accompanying Combined Pro Forma Statements of Operations would contain the following additional adjustments:
|
Six Months
Ended
March 31,
2010
|
Year Ended
September 30, 2009
|
|||||||
|
Post Acquisition Pro Forma Adjustments to Combined Condensed Statement of Operations:
|
||||||||
|
Cost of revenue:
|
||||||||
|
Reduction of direct labor costs to align staffing levels with revenue
|
$ | (27 | ) | $ | (595 | ) | ||
|
Total cost of revenue
|
(27 | ) | (595 | ) | ||||
|
Operating expenses:
|
||||||||
|
Reduction in indirect labor costs
|
(287 | ) | (797 | ) | ||||
|
Decrease in professional fees
|
(68 | ) | (191 | ) | ||||
|
Decrease in insurance and bank fees
|
(46 | ) | (95 | ) | ||||
|
Total operating expenses
|
(401 | ) | (1,083 | ) | ||||
|
Total Post Acquisition Pro Forma Increase in Net Income
|
$ | 428 | $ | 1,678 | ||||
F-29