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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sonic Foundry Inc (CE) | USOTC:SOFO | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0003 | 0.00 | 01:00:00 |
ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MARYLAND
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39-1783372
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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222 W. Washington Ave, Madison, WI 53703
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(608) 443-1600
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(Address of principal executive offices)
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(Issuer’s telephone number)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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ý
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PAGE NO.
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•
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Improve learners’ academic and professional success
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•
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Keep geographically-dispersed audiences and mobile teams connected
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•
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Boost productivity and overall organizational knowledge
|
•
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Reduce logistical and financial impacts of day-to-day communications
|
•
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Stream live and on-demand
video to any device
|
•
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Create an enterprise or campus YouTube
with Mediasite Showcase
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•
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Automatically publish video
to their learning management system (LMS), content management system (CMS), training portal or any website
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•
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Deepen engagement
and improve learning with polls, ask-a-question, surveys and other interactive tools
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•
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Search everything
with fully indexed audio, video and slide content
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•
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Monitor who is watching
what videos when to measure learner engagement and outcomes
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•
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Centrally manage
and secure any video
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•
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My Mediasite:
My Mediasite makes it a snap for instructors, employees and students to create great looking videos, screencasts and slideshows from their computers or mobile devices. From demos and video training to flipped classes, lectures and assignments, everything to record, upload, manage and publish personal videos is in one simple-to-use tool, requiring no pro video skills.
|
•
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Mediasite RL Recorders:
The RL Series of built-in room appliances uses schedule-based capture and advanced audio/video integration to fully automate video and content recording
in lecture halls, training rooms, simulation labs and auditoriums.
Instructors and speakers teach and present as they are most comfortable, free from technology worries and confident that everything they say and show is captured.
|
•
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Mediasite Catch:
Our latest video capture solution, Mediasite Catch, provides a scalable, economical solution to extend video capture to any classrooms on campus, even if they’re not equipped with extensive audio/video capabilities. Combining the reliability of Mediasite’s recorder-based scheduling automation with the affordability and simplicity of podium-based software, Mediasite Catch provides faculty a worry-free classroom recording experience.
|
•
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Mediasite ML Recorders:
Anyone can be a video producer with the ML Series of portable recording solutions to capture and stream broadcast-quality video.
Designed for on-the-go webcasting, hybrid events, guest speakers and conferences, Mediasite ML’s lightweight design moves easily from location to location and can be set up and ready to record in only a few minutes.
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•
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Mediasite Join:
Real-time video is how today’s best teams, businesses and schools collaborate, exchange ideas and get things done. But too often great ideas, subject matter expertise and important details are forgotten or left behind when a video call ends. Mediasite Join automatically records video and web conferences, transforming them into valuable, searchable video on demand. As a cloud service, it’s the easiest way to capture and preserve any video call or meeting.
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•
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Expand their audience reach by streaming to those that cannot attend in person
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•
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Maximize event ROI by generating additional revenue streams from video recordings
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•
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Differentiate themselves from competing events
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•
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Bolster training and communication effectiveness with interactive video and audience engagement tools
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•
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Build stronger teams and deepen morale
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•
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Save travel time and money
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•
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Improve retention and learning outcomes
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•
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Advanced Integration Services:
The value of Mediasite grows when customers’ video assets and streaming workflows seamlessly integrate with the systems that drive their online learning, training or communication strategies. Mediasite Advanced
|
•
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Installation Services:
Sonic Foundry provides on-site consulting and installation services to help customers optimize deployments and efficiently integrate Mediasite within existing AV and IT infrastructures, processes and workflows.
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•
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Training Services:
Expert Sonic Foundry trainers provide the necessary knowledge transfer so organizations feel confident in using, managing and leveraging Mediasite’s capabilities. On-site training is customized to specific requirements and skill levels, while online training provides convenient anytime access to a web-based catalog of training modules.
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•
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Software upgrades and updates for Mediasite Video Platform and Mediasite Capture Solutions
|
•
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Unlimited technical support assistance
|
•
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Mediasite Recorder hardware warranty extension
|
•
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Advanced Mediasite Recorder replacement
|
•
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Authorized access to the Mediasite Customer Assurance Portal for 24/7 case management, software downloads, documentation, the Mediasite Knowledge Base and other technical resources
|
•
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Authorized access to the Mediasite Community for online training videos, customer-exclusive webcasts, peer-to-peer best practice sharing and more
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•
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Mediasite Monitoring Service with near real time monitoring of all Mediasite assets, proactive incident notification and Sonic Foundry support response for critical issues, exceptions and anticipated issues that may impact day-to-day Mediasite operations
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•
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Priority technical support with queue bypass and support case escalation
|
•
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Proactive Mediasite version administration and management
|
•
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On-site provisioning of Mediasite Recorders to be used in the event of a hardware failure
|
•
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Quarterly Mediasite roadmap discussions with Sonic Foundry’s executive team
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•
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Complete platform addressing the entire video lifecycle
- From content creation and delivery to retention and management. Mediasite’s portfolio of video solutions provides customers maximum flexibility and scalability to develop a comprehensive enterprise video strategy.
|
•
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Interactive, consistent playback experiences across devices -
Mediasite involves the viewer in their online video experience with polls, bookmarks, sharing, ask-a-question, resource links and more. Plus, Mediasite’s consistent playback experience across all devices significantly reduces learning curves and accelerates adoption and content mastery.
|
•
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Auto-indexing and powerful video search -
As a video search pioneer for over a decade, we have substantial experience in search precision. Mediasite SmartSearch automatically makes all videos as searchable as text, so keywords can be found
anywhere
- in audio, slides, handwriting, video or tags
.
|
•
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Deep viewership analytics -
Mediasite’s powerful video analytics and built-in reports show exactly who is watching what and when. It’s the deep insight users need to understand viewing behaviors and engagement, to measure video’s impact and value and make informed decisions.
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•
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Unmatched support network -
Sonic Foundry and the growing Mediasite Community provide a reliable, collaborative support network for all Mediasite customers. Our worldwide network of field-based system engineers and responsive customer care ensure that customers have resources committed to their success. Plus, with nearly 2,000 active customers, the Mediasite Community is one of the most vibrant and growing user communities for video, webcasting, lecture capture and e-learning. Members share ideas and get feedback year-round from community experts through a private online portal, customer-exclusive webcasts and unrivaled networking and learning opportunities at Unleash, the global Mediasite User Conference and other regional customer events.
|
•
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Lecture capture
|
•
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Flipped classroom instruction: students view lectures from home and use classroom time for discussion
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•
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Blended, hybrid and distance learning
|
•
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Continuing education
|
•
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Campus YouTube
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•
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Special events: commencement, guest speakers, sporting events, etc.
|
•
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Faculty training and development
|
•
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Student video projects
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•
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Recruitment and admissions
|
•
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University business: leadership meetings, alumni relations, outreach
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•
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Improves student learning outcomes
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•
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Keeps their institution competitive by supporting higher enrollment and/or tuition without new classrooms
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•
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Empowers faculty with technology supporting new teaching pedagogies both in the classroom and online
|
•
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Boosts campus outreach, recruitment efforts and awareness of campus events
|
•
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Helps campuses manage, secure and search all campus video
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•
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Executive communications: town hall meetings, all-hands meetings
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•
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Workforce development: onboarding and training, HR communications, policy documentation
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•
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Secure corporate YouTube
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•
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Sales, marketing and customer support
|
•
|
Investor relations: earnings calls, analyst briefings, annual reports
|
•
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Conferences and events: user group, sales and annual meetings
|
•
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Continuing medical education, medical conferences and seminars
|
•
|
Grand rounds, simulations and procedural training
|
•
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Pharmaceutical and new product education Caregiver and patient education
|
•
|
Emergency response coordination and public health announcements
|
•
|
Research and collaboration
|
•
|
Training and compliance
|
•
|
Inter- and intra-agency communications
|
•
|
Legislative proceedings
|
•
|
Constituent outreach, committee meetings, public safety announcements
|
•
|
Relief work, military coordination, emergency preparedness
|
•
|
Expands training and communications opportunities
|
•
|
Cuts travel and meeting expenses
|
•
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Boosts efficiency by allowing participants to watch when it’s convenient to avoid interruptions and increase retention
|
•
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Helps build stronger teams through direct management and employee communications
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•
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Advancing enterprise video content management to accommodate organizations’ existing digital video assets, content generated from third-party video sources and the corresponding metadata associated with those video assets.
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•
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Introducing new applications to easily publish, search and retrieve videos from a video library as well as expanding and automating Mediasite’s powerful multi-modal search capabilities.
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•
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Offering the industry’s widest variety of content capture solutions capable of scaling economically across entire organizations and allowing anyone, on any device, to capture and share their knowledge or expertise.
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•
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Delivering content capture solutions that test the limits of recording, synchronizing and playing back multiple high definition video sources.
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•
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Supporting consistent, interactive content playback experiences across all viewing devices.
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•
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Deepening integration with core enterprise platforms including collaborative platforms like video and web conferencing, learning and course management systems (LMS/CMS), content management systems and student information systems (SIS).
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•
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Introducing market-driven innovations to our Mediasite Video Cloud offering.
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•
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Customer success stories regularly shared through our best practices webinar series, Enterprise Video Awards program, speaking placements at industry events, email marketing, industry guest columns and blog
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•
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Thought leadership content created and curated from customer successes, Sonic Foundry subject matter experts (SMEs) and industry experts in the form of ebooks, whitepapers, videos, best practice toolkits and more
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•
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The Mediasite Community, a vibrant online community of 2000+ users and its companion community events including the global Mediasite User Conference, Unleash; Mediasite Summits in Europe and Australia/New Zealand; and year-round regional chapter meetings
|
•
|
Appliance- or room-based lecture capture provides a fully integrated system with complete recording automation for live or on-demand content. The automated, pre-scheduled workflow results in the greatest faculty and staff adoption and largest volumes of recorded content in the shortest amount of time.
|
•
|
Software-based lecture capture that resides on a podium or computer in the classroom also captures and publishes rich media content, but relies on campus- or user-supplied hardware.
|
•
|
Desktop capture tools reside on individual users’ laptops or computers allowing them to record user-generated content.
|
•
|
Variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue and other financial metrics and non-financial metrics, and how those results compare to investor expectations;
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•
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Our announcement of actual results for a fiscal period that are higher or lower than expected results or our announcement of revenue or earnings guidance that is higher or lower than expected, including as a result of difficulty forecasting seasonal variations in our financial condition and operating results;
|
•
|
Changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;
|
•
|
Announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;
|
•
|
Announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or our competitors;
|
•
|
Announcements of customer additions and customer cancellations or delays in customer purchases;
|
•
|
Recruitment or departure of key personnel;
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•
|
Disruptions in our service due to computer hardware, software, network or data center problems;
|
•
|
The economy as a whole, market conditions in our industry and the industries of our customers;
|
•
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The issuance of shares of common stock by us, whether in connection with an acquisition or a capital raising transaction;
|
•
|
Low trading volumes of our shares and inconsistent trading activity;
|
•
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Issuance of debt and other convertible securities; and
|
•
|
Any other factors discussed herein.
|
•
|
Appliance- or room-based lecture capture provides a fully integrated system with complete recording automation for live or on-demand content. The automated, pre-scheduled workflow results in the greatest faculty and staff adoption and largest volumes of recorded content in the shortest amount of time.
|
•
|
Software-based lecture capture that resides on a podium or computer in the classroom also captures and publishes rich media content, but relies on campus- or user-supplied hardware.
|
•
|
Desktop capture tools reside on individual users’ laptops or computers allowing them to record user-generated content.
|
•
|
Difficulties in establishing and managing international subsidiaries, distribution channels and operations;
|
•
|
Difficulties in selling, servicing and supporting overseas products, translating products into foreign languages and compliance with local hardware requirements;
|
•
|
Difficulties in managing the demands of large international deployments, many of which distract key sales personnel from opportunities in other parts of the world;
|
•
|
Challenges associated with management transition;
|
•
|
Challenges related to language or cultural differences;
|
•
|
The uncertainty of laws and enforcement in certain countries, such as China, relating to the protection of intellectual property or requirements for product certification, protection of personal data or other restrictions;
|
•
|
Competitive pressure impacting other parts of the world;
|
•
|
Multiple and possibly overlapping tax structures;
|
•
|
Currency and exchange rate fluctuations;
|
•
|
Difficulties in collecting accounts receivable in foreign countries, including complexities in documenting letters of credit;
|
•
|
Economic or political changes in international markets;
|
•
|
Restrictions on access to the Internet; and
|
•
|
Difficulty in complying with international employment related requirements
|
•
|
The potential failure to achieve the expected benefits of the combination or acquisition;
|
•
|
Difficulties in and the cost of integrating operations, technologies, services and personnel;
|
•
|
Diversion of financial and managerial resources from existing operations;
|
•
|
Risk of entering new markets in which we have little or no experience or where competitors may have stronger market positions;
|
•
|
Potential write-offs of acquired assets or investments, and potential financial and credit risks associated with acquired customers;
|
•
|
Potential loss of key employees;
|
•
|
Inability to generate sufficient revenue to offset acquisition or investment costs;
|
•
|
The inability to maintain relationships with customers and partners of the acquired business;
|
•
|
The difficulty of transitioning the acquired technology onto our existing platforms and maintaining the security standards consistent with our other services for such technology;
|
•
|
Potential unknown liabilities associated with the acquired businesses;
|
•
|
Unanticipated expenses related to acquired technology and its integration into existing technology;
|
•
|
Negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation, and the loss of acquired deferred revenue and unbilled deferred revenue;
|
•
|
Delays in customer purchases due to uncertainty related to any acquisition;
|
•
|
The need to implement controls, procedures and policies at the acquired company;
|
•
|
Challenges caused by distance, language and cultural differences;
|
•
|
In the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and currency, technological, employee and other regulatory risks and uncertainties in the economic, social and political conditions associated with specific countries; and
|
•
|
The tax effects of any such acquisitions.
|
•
|
Damage our reputation;
|
•
|
Cause our customers to initiate product liability suits against us;
|
•
|
Increase our product development resources;
|
•
|
Cause customers to cancel orders, ask for partial refunds or potential customers to purchase competitive products or services;
|
•
|
Delay release or market acceptance of our products, or otherwise adversely impact our relationships with our customers; and
|
•
|
Cause us to allocate valuable engineering resources to fix our existing products, which may cause us to allocate fewer resources toward developing new products, or toward adding features to our existing products.
|
•
|
Any patents acquired by or issued to us may not be broad enough to protect us.
|
•
|
Any issued patent could be successfully challenged by one or more third parties, which could result in our loss of the right to prevent others from exploiting the inventions claimed in those patents.
|
•
|
Current and future competitors may independently develop similar technology, duplicate our services or design around any of our patents.
|
•
|
Effective patent protection, including effective legal-enforcement mechanisms against those who violate our patent-related assets, may not be available in every country in which we do or plan to do business.
|
•
|
We may not have the resources to enforce our patents or may determine the potential benefits are not worth the cost and risk of ultimately being unsuccessful.
|
•
|
Third parties may infringe or misappropriate our copyrights, trademarks and similar proprietary rights.
|
•
|
Laws and contractual restrictions may not be sufficient to prevent misappropriation of our technology or to deter others from developing similar technologies, particularly in foreign countries where the laws may not protect our proprietary rights as fully or as readily as Unites States laws. Our recent growth in activities in China will likely increase this risk.
|
•
|
There have been attacks on certain patent systems, increasing the likelihood of changes to established laws, including in the United States. We cannot predict the long-term effects of any potential changes, which could be detrimental to our licensing program.
|
•
|
Effective trademark, copyright and trade secret protection, including effective legal-enforcement mechanisms against those who violate our trademark, copyright or trade secret assets, may be cost prohibitive or unavailable or limited in foreign countries.
|
•
|
Contractual agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information.
|
•
|
Other companies may claim common law trademark rights based upon state or foreign laws that precede the federal registration of our marks.
|
•
|
Policing unauthorized use of our services and trademarks is difficult, expensive and time-consuming, and we may be unable to determine the extent of any unauthorized use.
|
|
High
|
|
Low
|
||||
Year Ended September 30, 2017:
|
|
|
|
||||
First Quarter (through December 9, 2016)
|
$
|
5.92
|
|
|
$
|
4.50
|
|
Year Ended September 30, 2016:
|
|
|
|
||||
First Quarter
|
8.25
|
|
|
5.00
|
|
||
Second Quarter
|
6.98
|
|
|
4.28
|
|
||
Third Quarter
|
8.51
|
|
|
5.76
|
|
||
Fourth Quarter
|
6.50
|
|
|
5.75
|
|
||
Year Ended September 30, 2015:
|
|
|
|
||||
First Quarter
|
10.57
|
|
|
7.22
|
|
||
Second Quarter
|
9.90
|
|
|
7.35
|
|
||
Third Quarter
|
10.47
|
|
|
5.98
|
|
||
Fourth Quarter
|
9.38
|
|
|
5.30
|
|
Plan category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
Weighted average
exercise price of
outstanding
options, warrants
and rights
|
|
Number of
securities
remaining
available for
future issuance
|
||||
|
(a)
|
|
(b)
|
|
(c)
|
||||
Equity compensation plans approved by security holders (1)
|
1,550,264
|
|
|
$
|
8.58
|
|
|
373,389
|
|
Equity compensation plans not approved by security holders (2)
|
52,558
|
|
|
12.87
|
|
|
—
|
|
|
Total
|
1,602,822
|
|
|
$
|
9.52
|
|
|
373,389
|
|
(1)
|
Consists of the 2009 Stock Incentive Plan, Employee Incentive Stock Option Plan and the Directors Stock Option Plans. For further information regarding these plans, reference is made to Note 5 of the financial statements.
|
(2)
|
Consists of the Non-Qualified Stock Option Plan. For further information regarding this plan, reference is made to Note 5 of the financial statements.
|
|
Years Ended September 30,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
37,975
|
|
|
$
|
36,459
|
|
|
$
|
35,830
|
|
|
$
|
27,756
|
|
|
$
|
26,090
|
|
Cost of revenue
|
9,985
|
|
|
10,635
|
|
|
10,275
|
|
|
7,696
|
|
|
7,246
|
|
|||||
Gross margin
|
27,990
|
|
|
25,824
|
|
|
25,555
|
|
|
20,060
|
|
|
18,844
|
|
|||||
Operating expenses
|
30,266
|
|
|
29,916
|
|
|
28,637
|
|
|
20,698
|
|
|
18,735
|
|
|||||
Income (loss) from operations
|
(2,276
|
)
|
|
(4,092
|
)
|
|
(3,082
|
)
|
|
(638
|
)
|
|
109
|
|
|||||
Gain on investment in Mediasite KK
|
—
|
|
|
—
|
|
|
1,390
|
|
|
—
|
|
|
—
|
|
|||||
Equity in earnings from investment in Mediasite KK
|
—
|
|
|
—
|
|
|
38
|
|
|
209
|
|
|
420
|
|
|||||
Other income (expense), net
|
(178
|
)
|
|
46
|
|
|
173
|
|
|
(123
|
)
|
|
(132
|
)
|
|||||
Interest expense, net
|
(594
|
)
|
|
(372
|
)
|
|
(231
|
)
|
|
—
|
|
|
—
|
|
|||||
Provision for income taxes
|
(269
|
)
|
|
(107
|
)
|
|
(1,104
|
)
|
|
(240
|
)
|
|
(240
|
)
|
|||||
Net income (loss)
|
$
|
(3,317
|
)
|
|
$
|
(4,525
|
)
|
|
$
|
(2,816
|
)
|
|
$
|
(792
|
)
|
|
$
|
157
|
|
Basic net income (loss) per common share
|
$
|
(0.76
|
)
|
|
$
|
(1.04
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
0.04
|
|
Diluted net income (loss) per common share
|
$
|
(0.76
|
)
|
|
$
|
(1.04
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
0.04
|
|
Weighted average common shares:
– Basic
|
4,389,421
|
|
|
4,332,576
|
|
|
4,174,191
|
|
|
3,932,692
|
|
|
3,857,161
|
|
|||||
– Diluted
|
4,389,421
|
|
|
4,332,576
|
|
|
4,174,191
|
|
|
3,932,692
|
|
|
3,907,888
|
|
|||||
Balance Sheet Data at September 30:
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Cash and cash equivalents
|
$
|
1,794
|
|
|
$
|
1,976
|
|
|
$
|
4,344
|
|
|
$
|
3,482
|
|
|
$
|
4,478
|
|
Working capital
|
(2,645
|
)
|
|
(618
|
)
|
|
18
|
|
|
2,575
|
|
|
3,332
|
|
|||||
Total assets
|
33,158
|
|
|
34,803
|
|
|
34,623
|
|
|
24,333
|
|
|
22,821
|
|
|||||
Long-term liabilities
|
7,249
|
|
|
8,435
|
|
|
7,268
|
|
|
3,585
|
|
|
3,748
|
|
|||||
Stockholders’ equity
|
6,516
|
|
|
7,803
|
|
|
11,315
|
|
|
10,704
|
|
|
10,539
|
|
•
|
Revenue recognition, allowance for doubtful accounts and reserves;
|
•
|
Impairment of long-lived assets;
|
•
|
Valuation allowance for net deferred tax assets; and
|
•
|
Accounting for stock-based compensation.
|
•
|
Product and other revenue from the sale of Mediasite recorder units and server software
decreased
from
$16.3 million
in fiscal
2015
to
$16.2 million
in fiscal
2016
. Revenue for 208 recorders delivered in Q4-2015 to an international customer was deferred at
September 30, 2016
and the units are not included in the units sold figures shown below. The average sales price per unit improved in fiscal
2016
while total units sold decreased as compared to fiscal
2015
during which both the average sales price per unit and the number of units sold were impacted by two large discounted deals to international customers for over 250 units.
|
|
2016
|
|
2015
|
Units sold
|
1,474
|
|
1,977
|
Rack to mobile ratio
|
5.9 to 1
|
|
5.8 to 1
|
Average sales price, excluding support (000’s)
|
$7.9
|
|
$7.3
|
Refresh Units
|
426
|
|
465
|
•
|
Services revenue represents the portion of fees charged for Mediasite customer support contracts amortized over the length of the contract, typically 12 months, as well as training, installation, event and content hosting services. Services revenue
increased
from
$20.2 million
in fiscal
2015
to
$21.7 million
in fiscal
2016
due primarily to an increase in hosting revenues as compared to fiscal
2015
. In addition, revenue related to support contracts on Mediasite recorder units increased compared to fiscal
2015
. At
September 30, 2016
,
$14.1 million
of revenue was deferred, of which we expect to recognize
$12.8 million
in the next twelve months, including approximately
$4.5 million
in the quarter ending December 31,
2016
. At
September 30, 2015
,
$12.7 million
of revenue was deferred.
|
•
|
Other revenue relates to freight charges billed separately to our customers.
|
•
|
Material and freight costs for Mediasite recorders. Costs for fiscal
2016
Mediasite recorder hardware and other costs totaled
$3.8 million
compared to
$5.3 million
in fiscal
2015
. Freight costs were
$278 thousand
, and labor and allocated costs were
$1.6 million
in fiscal
2016
compared to
$276 thousand
and
$1.3 million
, respectively, in fiscal
2015
. The remaining
$750 thousand
in fiscal
2016
and
$632 thousand
in fiscal
2015
relate to material and freight costs for Sonic Foundry International and MSKK.
|
•
|
Services costs. Staff wages and other costs allocated to cost of service revenues were
$2.0 million
in fiscal
2016
and
$1.9 million
in fiscal
2015
, respectively, resulting in gross margin on services of
84%
in fiscal
2016
and fiscal
2015
, respectively. The remaining
$1.5 million
in fiscal
2016
and
$1.3 million
in fiscal
2015
relate to costs of providing content hosting, events and technical support services at Sonic Foundry International and MSKK.
|
•
|
Advertising and tradeshow expenses
decreased
$180 thousand
.
|
•
|
Overall costs allocated to selling & marketing
decreased
by
$119 thousand
, primarily as a result of a decrease in facilities expenses (G&A) and an increase in selling & marketing expenses allocated to cost of goods sold.
|
•
|
Selling and marketing expenses for Sonic Foundry International and MSKK accounted for
$312 thousand
and
$2.8 million
, respectively in fiscal
2016
, an aggregate
increase
of
$160 thousand
from the prior year. The increase is mainly due to the impact of foreign currency exchange rates in fiscal
2016
.
|
•
|
Increase in compensation and benefits of
$196 thousand
related to an increase in headcount during the year.
|
•
|
Decrease
in facilities expenses of
$219 thousand
, primarily due to an increase in hosting expenses allocated to cost of revenue.
|
•
|
Increase
in costs allocable to G&A of
$54 thousand
, primarily as a result of higher expenses related to computer and office supplies.
|
•
|
G&A expenses for Sonic Foundry International and MSKK accounted for
$156 thousand
and
$884 thousand
, respectively in fiscal
2016
, an aggregate
decrease
of
$46 thousand
from the prior year.
|
•
|
Increase
in compensation and benefits of
$366 thousand
due to a higher average headcount during the year and an increase in compensation rates.
|
•
|
Professional services
increase
of
$144 thousand
, mainly due to the use of outsourced development.
|
•
|
Costs allocated from G&A
increased
by
$28 thousand
.
|
•
|
Product development expenses for Sonic Foundry International and MSKK accounted for
$389 thousand
and
$51 thousand
, respectively for fiscal
2016
, an aggregate
increase
of
$14 thousand
from the prior year related to the subsidiaries.
|
Contractual Obligations:
|
Total
|
|
Less than
1 Year
|
|
Years
2-3
|
|
Years
4-5
|
|
Over
5 years
|
||||||||||
Product purchase commitments
|
$
|
782
|
|
|
$
|
782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
|
4,000
|
|
|
1,341
|
|
|
2,001
|
|
|
658
|
|
|
—
|
|
|||||
Capital lease obligations (a)
|
551
|
|
|
307
|
|
|
214
|
|
|
27
|
|
|
3
|
|
|||||
Notes payable (a)
|
2,630
|
|
|
1,789
|
|
|
841
|
|
|
—
|
|
|
—
|
|
|||||
Subordinated notes payable (a)
|
93
|
|
|
93
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(a)
|
Includes fixed and determinable interest payments
|
|
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,794
|
|
|
$
|
1,976
|
|
Accounts receivable, net of allowances of $225 and $150
|
11,646
|
|
|
12,659
|
|
||
Inventories
|
1,904
|
|
|
2,385
|
|
||
Prepaid expenses and other current assets
|
1,404
|
|
|
927
|
|
||
Total current assets
|
16,748
|
|
|
17,947
|
|
||
Property and equipment:
|
|
|
|
||||
Leasehold improvements
|
879
|
|
|
904
|
|
||
Computer equipment
|
5,837
|
|
|
5,852
|
|
||
Furniture and fixtures
|
825
|
|
|
837
|
|
||
Total property and equipment
|
7,541
|
|
|
7,593
|
|
||
Less accumulated depreciation and amortization
|
5,510
|
|
|
4,785
|
|
||
Property and equipment, net
|
2,031
|
|
|
2,808
|
|
||
Other assets:
|
|
|
|
||||
Goodwill
|
11,310
|
|
|
10,853
|
|
||
Customer relationships, net of amortization of $723 and $457
|
1,882
|
|
|
1,872
|
|
||
Software development costs, net of amortization of $533 and $429
|
—
|
|
|
104
|
|
||
Product rights, net of amortization of $287 and $164
|
385
|
|
|
508
|
|
||
Other intangibles, net of amortization of $236 and $190
|
76
|
|
|
112
|
|
||
Other long-term assets
|
726
|
|
|
599
|
|
||
Total assets
|
$
|
33,158
|
|
|
$
|
34,803
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Revolving line of credit
|
$
|
1,772
|
|
|
$
|
1,818
|
|
Accounts payable
|
961
|
|
|
2,026
|
|
||
Accrued liabilities
|
1,883
|
|
|
1,666
|
|
||
Unearned revenue
|
12,834
|
|
|
11,359
|
|
||
Current portion of capital lease and financing arrangements
|
283
|
|
|
211
|
|
||
Current portion of notes payable and warrant debt, net of discounts
|
1,567
|
|
|
1,299
|
|
||
Current portion of subordinated note payable
|
93
|
|
|
186
|
|
||
Total current liabilities
|
19,393
|
|
|
18,565
|
|
||
Long-term portion of unearned revenue
|
1,257
|
|
|
1,325
|
|
||
Long-term portion of capital lease and financing arrangements
|
231
|
|
|
196
|
|
||
Long-term portion of notes payable and warrant debt, net of discounts
|
871
|
|
|
2,080
|
|
||
Long-term portion of subordinated note payable
|
—
|
|
|
92
|
|
||
Derivative liability, at fair value
|
67
|
|
|
109
|
|
||
Other liabilities
|
259
|
|
|
311
|
|
||
Deferred tax liability
|
4,564
|
|
|
4,322
|
|
||
Total liabilities
|
26,642
|
|
|
27,000
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $.01 par value, authorized 500,000 shares; none issued
|
—
|
|
|
—
|
|
||
5% Preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, authorized 10,000,000 shares; 4,424,275 and 4,376,456 shares issued and 4,411,559 and 4,363,740 shares outstanding
|
44
|
|
|
44
|
|
||
Additional paid-in capital
|
197,064
|
|
|
195,973
|
|
||
Accumulated deficit
|
(190,214
|
)
|
|
(186,897
|
)
|
||
Accumulated other comprehensive loss
|
(183
|
)
|
|
(1,122
|
)
|
Receivable for common stock issued
|
(26
|
)
|
|
(26
|
)
|
||
Treasury stock, at cost, 12,716 shares
|
(169
|
)
|
|
(169
|
)
|
||
Total stockholders’ equity
|
6,516
|
|
|
7,803
|
|
||
Total liabilities and stockholders’ equity
|
$
|
33,158
|
|
|
$
|
34,803
|
|
|
Years Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Revenue:
|
|
|
|
||||
Product
|
$
|
15,823
|
|
|
$
|
15,884
|
|
Services
|
21,734
|
|
|
20,160
|
|
||
Other
|
418
|
|
|
415
|
|
||
Total revenue
|
37,975
|
|
|
36,459
|
|
||
Cost of revenue:
|
|
|
|
||||
Product
|
6,459
|
|
|
7,406
|
|
||
Services
|
3,526
|
|
|
3,229
|
|
||
Total cost of revenue
|
9,985
|
|
|
10,635
|
|
||
Gross margin
|
27,990
|
|
|
25,824
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
17,801
|
|
|
18,016
|
|
||
General and administrative
|
5,628
|
|
|
5,635
|
|
||
Product development
|
6,837
|
|
|
6,265
|
|
||
Total operating expenses
|
30,266
|
|
|
29,916
|
|
||
Loss from operations
|
(2,276
|
)
|
|
(4,092
|
)
|
||
Non-operating income (expenses):
|
|
|
|
||||
Interest expense, net
|
(594
|
)
|
|
(372
|
)
|
||
Other income (expense), net
|
(178
|
)
|
|
46
|
|
||
Total non-operating income (expenses)
|
(772
|
)
|
|
(326
|
)
|
||
Loss before income taxes
|
(3,048
|
)
|
|
(4,418
|
)
|
||
Provision for income taxes
|
(269
|
)
|
|
(107
|
)
|
||
Net loss
|
$
|
(3,317
|
)
|
|
$
|
(4,525
|
)
|
Loss per common share:
|
|
|
|
||||
Basic net loss per common share
|
$
|
(0.76
|
)
|
|
$
|
(1.04
|
)
|
Diluted net loss per common share
|
$
|
(0.76
|
)
|
|
$
|
(1.04
|
)
|
Weighted average common shares – Basic
|
4,389,421
|
|
|
4,332,576
|
|
||
– Diluted
|
4,389,421
|
|
|
4,332,576
|
|
|
Years Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Net loss
|
$
|
(3,317
|
)
|
|
$
|
(4,525
|
)
|
Foreign currency translation adjustment
|
939
|
|
|
(701
|
)
|
||
Comprehensive loss
|
$
|
(2,378
|
)
|
|
$
|
(5,226
|
)
|
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Accumulated
deficit
|
|
Accumulated
other
comprehensive
loss
|
|
Receivable
for
common
stock issued
|
|
Treasury
stock
|
|
Total
|
||||||||||||||
Balance, September 30, 2014
|
$
|
43
|
|
|
$
|
194,260
|
|
|
$
|
(182,372
|
)
|
|
$
|
(421
|
)
|
|
$
|
(26
|
)
|
|
$
|
(169
|
)
|
|
$
|
11,315
|
|
Stock compensation
|
—
|
|
|
963
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
963
|
|
|||||||
Issuance of common stock
|
1
|
|
|
709
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
710
|
|
|||||||
Exercise of common stock options
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(701
|
)
|
|
—
|
|
|
—
|
|
|
(701
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
(4,525
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,525
|
)
|
|||||||
Balance, September 30, 2015
|
$
|
44
|
|
|
$
|
195,973
|
|
|
$
|
(186,897
|
)
|
|
$
|
(1,122
|
)
|
|
$
|
(26
|
)
|
|
$
|
(169
|
)
|
|
$
|
7,803
|
|
Stock compensation
|
—
|
|
|
847
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
847
|
|
|||||||
Issuance of common stock and warrants
|
—
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244
|
|
|||||||
Exercise of common stock options
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
939
|
|
|
—
|
|
|
—
|
|
|
939
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
(3,317
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,317
|
)
|
|||||||
Balance, September 30, 2016
|
$
|
44
|
|
|
$
|
197,064
|
|
|
$
|
(190,214
|
)
|
|
$
|
(183
|
)
|
|
$
|
(26
|
)
|
|
$
|
(169
|
)
|
|
$
|
6,516
|
|
|
Years Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(3,317
|
)
|
|
$
|
(4,525
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Amortization of other intangibles
|
652
|
|
|
669
|
|
||
Depreciation and amortization of property and equipment
|
1,553
|
|
|
1,599
|
|
||
Loss on sale of fixed assets
|
72
|
|
|
—
|
|
||
Provision for doubtful accounts
|
75
|
|
|
57
|
|
||
Deferred taxes
|
341
|
|
|
53
|
|
||
Stock-based compensation expense related to stock options and warrants
|
861
|
|
|
963
|
|
||
Remeasurement gain on subordinated debt
|
(3
|
)
|
|
(202
|
)
|
||
Remeasurement gain on derivative liability
|
(58
|
)
|
|
(11
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,341
|
|
|
(4,379
|
)
|
||
Inventories
|
514
|
|
|
(344
|
)
|
||
Prepaid expenses and other current assets
|
(532
|
)
|
|
169
|
|
||
Accounts payable and accrued liabilities
|
(966
|
)
|
|
111
|
|
||
Other long-term liabilities
|
(60
|
)
|
|
(86
|
)
|
||
Unearned revenue
|
1,243
|
|
|
2,800
|
|
||
Net cash provided by (used in) operating activities
|
1,716
|
|
|
(3,126
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(339
|
)
|
|
(722
|
)
|
||
Net cash used in investing activities
|
(339
|
)
|
|
(722
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from notes payable
|
500
|
|
|
2,336
|
|
||
Proceeds from line of credit
|
17,845
|
|
|
8,535
|
|
||
Payments on notes payable
|
(1,693
|
)
|
|
(2,894
|
)
|
||
Payments on line of credit
|
(17,958
|
)
|
|
(6,727
|
)
|
||
Payment of debt issuance costs
|
(36
|
)
|
|
(122
|
)
|
||
Proceeds from issuance of common stock and warrants
|
66
|
|
|
710
|
|
||
Proceeds from exercise of common stock options
|
—
|
|
|
41
|
|
||
Payments on capital lease and financing arrangements
|
(278
|
)
|
|
(252
|
)
|
||
Net cash provided by (used in) financing activities
|
(1,554
|
)
|
|
1,627
|
|
||
Changes in cash and cash equivalents due to changes in foreign currency
|
(5
|
)
|
|
(147
|
)
|
||
Net decrease in cash and cash equivalents
|
(182
|
)
|
|
(2,368
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,976
|
|
|
4,344
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,794
|
|
|
$
|
1,976
|
|
Supplemental cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
529
|
|
|
$
|
424
|
|
Income taxes paid, foreign
|
27
|
|
|
31
|
|
||
Non-cash financing and investing activities:
|
|
|
|
||||
Property and equipment financed by capital lease or accounts payable
|
402
|
|
|
292
|
|
||
Debt discount
|
16
|
|
|
179
|
|
||
Stock issued for board of director's fees
|
164
|
|
|
—
|
|
||
Warrants issued for investor relations services
|
14
|
|
|
—
|
|
|
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Raw materials and supplies
|
$
|
149
|
|
|
$
|
254
|
|
Finished goods
|
1,755
|
|
|
2,131
|
|
||
|
$
|
1,904
|
|
|
$
|
2,385
|
|
|
Years
|
Leasehold improvements
|
5 to 10 years
|
Computer equipment
|
3 to 5 years
|
Furniture and fixtures
|
5 to 7 years
|
September 30, 2016
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||
Derivative liability
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
67
|
|
September 30, 2015
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||
PFG debt, net of discount
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,347
|
|
|
$
|
1,347
|
|
Warrant debt
|
—
|
|
|
—
|
|
|
63
|
|
|
63
|
|
||||
Derivative liability
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
||||
|
$
|
—
|
|
|
$
|
109
|
|
|
$
|
1,410
|
|
|
$
|
1,519
|
|
|
PFG Debt, net
of discount
|
|
Warrant
Debt
|
||||
Balance as of September 30, 2015
|
$
|
1,347
|
|
|
$
|
63
|
|
Activity during the period:
|
|
|
|
||||
Disbursement of Tranche 2, net of discount
|
462
|
|
|
22
|
|
||
Payments to PFG
|
(655
|
)
|
|
—
|
|
||
Change in fair value
|
71
|
|
|
17
|
|
||
Balance as of September 30, 2016
|
$
|
1,225
|
|
|
$
|
102
|
|
|
Years Ending September 30,
|
||
|
2016
|
|
2015
|
Expected life
|
4.9 – 5.0 years
|
|
4.8 – 5.0 years
|
Risk-free interest rate
|
0.84%-1.23%
|
|
0.96%-1.05%
|
Expected volatility
|
53.8%-57.2%
|
|
45.5%-50.0%
|
Expected forfeiture rate
|
10.3 %-11.8%
|
|
10.7 %-12.0%
|
Expected exercise factor
|
1.35-1.44
|
|
1.40-1.43
|
Expected dividend yield
|
—%
|
|
—%
|
|
Years Ending
September 30, |
||||
|
2016
|
|
2015
|
||
Denominator for basic earnings (loss) per share
|
|
|
|
||
-weighted average common shares
|
4,389,421
|
|
|
4,332,576
|
|
Effect of dilutive options and warrants (treasury method)
|
—
|
|
|
—
|
|
Denominator for diluted earnings (loss) per share
|
|
|
|
||
-adjusted weighted average common shares
|
4,389,421
|
|
|
4,332,576
|
|
Options and warrants outstanding during each year, but not included in the computation of diluted earnings (loss) per share because they are antidilutive
|
1,737,624
|
|
|
1,560,211
|
|
Fiscal Year (in thousands)
|
Capital
|
||
2017
|
$
|
307
|
|
2018
|
156
|
|
|
2019
|
58
|
|
|
2020
|
14
|
|
|
2021
|
13
|
|
|
Thereafter
|
3
|
|
|
Total payments
|
551
|
|
|
Less interest
|
(37
|
)
|
|
Total
|
$
|
514
|
|
Fiscal Year (in thousands)
|
Operating
|
||
2017
|
$
|
1,341
|
|
2018
|
1,287
|
|
|
2019
|
714
|
|
|
2020
|
526
|
|
|
2021
|
132
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
4,000
|
|
Fiscal Year (in thousands)
|
|
||
2017
|
$
|
1,640
|
|
2018
|
816
|
|
|
Less warrant debt & discount
|
(18
|
)
|
|
Total
|
$
|
2,438
|
|
Fiscal Year (in thousands)
|
|
||
2017
|
$
|
93
|
|
Total
|
$
|
93
|
|
|
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Accrued compensation
|
$
|
1,258
|
|
|
$
|
1,166
|
|
Accrued expenses
|
365
|
|
|
221
|
|
||
Accrued interest & taxes
|
257
|
|
|
186
|
|
||
Other accrued liabilities
|
3
|
|
|
93
|
|
||
Total
|
$
|
1,883
|
|
|
$
|
1,666
|
|
|
Qualified
Employee
Stock Option
Plans
|
|
Director
Stock Option
Plans
|
||
Shares available for grant at September 30, 2014
|
853,766
|
|
|
19,500
|
|
Options granted
|
(307,119
|
)
|
|
(10,500
|
)
|
Options forfeited
|
39,384
|
|
|
8,000
|
|
Shares available for grant at September 30, 2015
|
586,031
|
|
|
17,000
|
|
Options granted
|
(233,381
|
)
|
|
(10,500
|
)
|
Options forfeited
|
14,239
|
|
|
—
|
|
Shares available for grant at September 30, 2016
|
366,889
|
|
|
6,500
|
|
|
Years Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
||||||||
Outstanding at beginning of year
|
1,449,409
|
|
|
$
|
10.03
|
|
|
1,240,941
|
|
|
$
|
10.31
|
|
||
Granted
|
243,881
|
|
|
7.16
|
|
|
317,619
|
|
|
9.22
|
|
||||
Exercised
|
(2,968
|
)
|
|
6.74
|
|
|
(11,117
|
)
|
|
7.27
|
|
||||
Forfeited
|
(87,500
|
)
|
|
11.02
|
|
|
(98,034
|
)
|
|
11.27
|
|
||||
Outstanding at end of year
|
1,602,822
|
|
|
$
|
9.51
|
|
|
1,449,409
|
|
|
$
|
10.03
|
|
||
Exercisable at end of year
|
1,062,837
|
|
|
|
|
885,777
|
|
|
|
||||||
Weighted average fair value of options granted during the year
|
$
|
2.62
|
|
|
|
|
$
|
3.18
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Exercise Prices
|
Options
Outstanding at September 30, 2016 |
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Options
Exercisable at September 30, 2016 |
|
Weighted
Average
Exercise
Price
|
||||||
$ 4.50 to $9.87
|
1,245,264
|
|
|
6.70
|
|
$
|
8.17
|
|
|
773,336
|
|
|
$
|
8.15
|
|
10.00 to 15.50
|
330,900
|
|
|
5.49
|
|
12.33
|
|
|
262,843
|
|
|
12.79
|
|
||
21.40 to 46.90
|
26,658
|
|
|
0.38
|
|
37.18
|
|
|
26,658
|
|
|
37.18
|
|
||
|
1,602,822
|
|
|
|
|
|
|
1,062,837
|
|
|
|
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Non-vested shares at October 1, 2015
|
563,632
|
|
|
$
|
4.46
|
|
Granted
|
243,881
|
|
|
2.72
|
|
|
Vested
|
(253,304
|
)
|
|
3.45
|
|
|
Forfeited
|
(14,224
|
)
|
|
3.34
|
|
|
Non-vested shares at September 30, 2016
|
539,985
|
|
|
$
|
3.21
|
|
|
Years Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Current tax expense U.S.
|
$
|
136
|
|
|
$
|
137
|
|
Current tax expense (benefit) foreign
|
133
|
|
|
(30
|
)
|
||
Deferred income tax expense
|
—
|
|
|
—
|
|
||
Provision for income taxes
|
$
|
269
|
|
|
$
|
107
|
|
|
Years Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
U.S.
|
$
|
(3,504
|
)
|
|
$
|
(4,122
|
)
|
Foreign
|
456
|
|
|
(296
|
)
|
||
Income (loss) before income taxes
|
$
|
(3,048
|
)
|
|
$
|
(4,418
|
)
|
|
Years Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Income tax expense (benefit) at statutory rate
|
$
|
(1,036
|
)
|
|
$
|
(1,502
|
)
|
State income tax expense (benefit)
|
(130
|
)
|
|
(131
|
)
|
||
Foreign tax activity
|
9
|
|
|
56
|
|
||
R&D tax credit expiration
|
—
|
|
|
—
|
|
||
Permanent differences, net
|
274
|
|
|
523
|
|
||
Adjustment of temporary differences to income tax returns
|
—
|
|
|
189
|
|
||
Change in valuation allowance
|
1,152
|
|
|
972
|
|
||
Income tax expense
|
$
|
269
|
|
|
$
|
107
|
|
|
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss and other carryforwards
|
$
|
34,563
|
|
|
$
|
36,492
|
|
Common stock options
|
1,134
|
|
|
961
|
|
||
Unearned revenue
|
389
|
|
|
439
|
|
||
Other
|
423
|
|
|
63
|
|
||
Total deferred tax assets
|
36,509
|
|
|
37,955
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Fixed assets
|
—
|
|
|
(149
|
)
|
||
Other
|
(144
|
)
|
|
(157
|
)
|
||
Total deferred tax liabilities
|
(144
|
)
|
|
(306
|
)
|
||
|
|
|
|
||||
Net deferred tax asset
|
36,365
|
|
|
37,649
|
|
||
Valuation allowance
|
(36,299
|
)
|
|
(37,525
|
)
|
||
Equity gains on investment in Mediasite KK
|
(916
|
)
|
|
(916
|
)
|
||
Customer relationships
|
(718
|
)
|
|
(716
|
)
|
||
Goodwill amortization
|
(2,930
|
)
|
|
(2,690
|
)
|
||
Net deferred tax liability for goodwill and intangible assets amortization
|
$
|
(4,498
|
)
|
|
$
|
(4,198
|
)
|
Balance as of September 30, 2014
|
$
|
11,185
|
|
Foreign currency translation adjustment
|
(332
|
)
|
|
Balance as of September 30, 2015
|
10,853
|
|
|
Foreign currency translation adjustment
|
457
|
|
|
Balance as of September 30, 2016
|
$
|
11,310
|
|
(in thousands)
|
Life
(years)
|
|
Gross
|
|
Accumulated
Amortization at September 30, 2016 |
|
Balance at
September 30, 2016 |
||||||
Amortizable:
|
|
|
|
|
|
|
|
||||||
Loan origination fees
|
3
|
|
$
|
312
|
|
|
$
|
236
|
|
|
$
|
76
|
|
Customer relationships
|
10
|
|
2,605
|
|
|
723
|
|
|
1,882
|
|
|||
Software development costs
|
3
|
|
533
|
|
|
533
|
|
|
—
|
|
|||
Product rights
|
6
|
|
672
|
|
|
287
|
|
|
385
|
|
|||
|
|
|
4,122
|
|
|
1,779
|
|
|
2,343
|
|
|||
Non-amortizable goodwill
|
|
|
11,310
|
|
|
—
|
|
|
11,310
|
|
|||
Total
|
|
|
$
|
15,432
|
|
|
$
|
1,779
|
|
|
$
|
13,653
|
|
(in thousands)
|
Life
(years)
|
|
Gross
|
|
Accumulated
Amortization at September 30, 2015 |
|
Balance at
September 30, 2015 |
||||||
Amortizable:
|
|
|
|
|
|
|
|
||||||
Loan origination fees
|
3
|
|
$
|
302
|
|
|
$
|
190
|
|
|
$
|
112
|
|
Customer relationships
|
10
|
|
2,329
|
|
|
457
|
|
|
1,872
|
|
|||
Software development costs
|
3
|
|
533
|
|
|
429
|
|
|
104
|
|
|||
Product rights
|
6
|
|
672
|
|
|
164
|
|
|
508
|
|
|||
|
|
|
3,836
|
|
|
1,240
|
|
|
2,596
|
|
|||
Non-amortizable goodwill
|
|
|
10,853
|
|
|
—
|
|
|
10,853
|
|
|||
Total
|
|
|
$
|
14,689
|
|
|
$
|
1,240
|
|
|
$
|
13,449
|
|
|
Years Ended
September 30,
|
||||||
|
2016
|
|
2015
|
||||
United States
|
$
|
22,686
|
|
|
$
|
20,396
|
|
Europe and Middle East
|
4,843
|
|
|
7,594
|
|
||
Asia
|
8,760
|
|
|
6,518
|
|
||
Other
|
1,686
|
|
|
1,951
|
|
||
Total
|
$
|
37,975
|
|
|
$
|
36,459
|
|
|
Quarterly Financial Data
|
||||||||||||||||||||||||||||||
(in thousands except per share data)
|
Q4-’16
|
|
Q3-’16
|
|
Q2-’16
|
|
Q1-’16
|
|
Q4-’15
|
|
Q3-’15
|
|
Q2-’15
|
|
Q1-’15
|
||||||||||||||||
Revenue
|
$
|
9,455
|
|
|
$
|
9,817
|
|
|
$
|
9,612
|
|
|
$
|
9,091
|
|
|
$
|
9,056
|
|
|
$
|
10,556
|
|
|
$
|
8,106
|
|
|
$
|
8,741
|
|
Gross margin
|
7,102
|
|
|
7,235
|
|
|
7,273
|
|
|
6,380
|
|
|
6,450
|
|
|
7,088
|
|
|
6,216
|
|
|
6,070
|
|
||||||||
Income (loss) from operations
|
(493
|
)
|
|
(452
|
)
|
|
(214
|
)
|
|
(1,117
|
)
|
|
(908
|
)
|
|
(885
|
)
|
|
(1,072
|
)
|
|
(1,227
|
)
|
||||||||
Net income (loss)
|
(847
|
)
|
|
(552
|
)
|
|
(711
|
)
|
|
(1,207
|
)
|
|
(1,222
|
)
|
|
(921
|
)
|
|
(1,350
|
)
|
|
(1,032
|
)
|
||||||||
Basic and diluted net income (loss) per share
|
$
|
(0.19
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.24
|
)
|
(a)
|
The following financial statements are filed as part of this report:
|
1
|
Financial Statements furnished are listed in the Table of Contents provided in response to Item 8.
|
2
|
Exhibits.
|
3.1
|
|
|
Articles of Amendment of Amended and Restated Articles of Incorporation, effective November 16, 2009, Amended and Restated Articles of Incorporation, effective January 26, 1998, and Articles of Amendment, effective April 9, 2000, filed as Exhibit No. 3.1 to the Annual Report on Form 10-K for the year ended September 30, 2009, and hereby incorporated by reference.
|
|
|
|
|
3.2
|
|
|
Amended and Restated By-Laws of the Registrant, filed as Exhibit No. 3.1 to the Form 8-K filed on October 11, 2011, and hereby incorporated by reference.
|
|
|
|
|
10.1*
|
|
|
Amended and Restated Employment Agreement between Registrant and Gary Weis dated as of September 30, 2011, filed as Exhibit 10.1 to the Form 8-K filed on October 4, 2011, and hereby incorporated by reference.
|
|
|
|
|
10.2*
|
|
|
Registrant’s 2008 Non-Employee Directors’ Stock Option Plan, as amended, filed as Exhibit 10.13 to the Form 10-Q filed on May 1, 2012, and hereby incorporated by reference.
|
|
|
|
|
10.3*
|
|
|
Registrant’s 2008 Employee Stock Purchase Plan filed as Exhibit C to Form 14A filed on January 28, 2008, and hereby incorporated by reference.
|
|
|
|
|
10.4*
|
|
|
Registrant’s 2009 Stock Incentive Plan, as amended, filed as Exhibit 10.15 to the Form 10-Q filed on May 1, 2012, and hereby incorporated by reference.
|
|
|
|
|
10.5
|
|
|
Lease Agreement between Registrant, as tenant, and West Washington Associates, LLC as landlord, dated June 28, 2011, filed as Exhibit 10.1 to the Form 8-K filed on July 1, 2011, and hereby incorporated by reference.
|
|
|
||
10.6
|
|
|
Second Amended and Restated Loan and Security Agreement dated June 27, 2011 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.2 to the Form 8-K filed on July 1, 2011, and hereby incorporated by reference.
|
|
|
||
10.7
|
|
|
First Amendment to Second Amended and Restated Loan and Security Agreement dated May 31, 2013 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.1 to the Form 8-K filed on June 3, 2013, and hereby incorporated by reference.
|
|
|
||
10.8
|
|
|
Second Amendment to Second Amended and Restated Loan and Security Agreement dated January 10, 2014 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.1 to the Form 8-K filed on January 16, 2014, and hereby incorporated by reference.
|
|
|
||
10.09*
|
|
|
Employment Agreement dated March 21, 2014 between Sonic Foundry, Inc. and Kenneth A. Minor, filed as Exhibit 10.2 to the Form 8-K filed on March 26, 2014, and hereby incorporated by reference.
|
10.10*
|
|
|
Employment Agreement dated March 21, 2014 between Sonic Foundry, Inc. and Robert M. Lipps, filed as Exhibit 10.1 to the Form 8-K filed on March 26, 2014, and hereby incorporated by reference.
|
|
|
|
|
10.11
|
|
|
Third Amendment to Second Amended and Restated Loan and Security Agreement dated March 24, 2014 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.1 to the Form 8-K filed on March 28, 2014, and hereby incorporated by reference.
|
|
|
|
|
10.12
|
|
|
Forms of Subscription Agreements, Lock-Up Agreements and Warrant Agreements dated December 22, 2014 among Sonic Foundry, Inc. and Mark Burish, and Sonic Foundry, Inc. and Andrew Burish, filed as Exhibits 10.1, 10.2, and 10.3 to the Form 8-K filed on December 30, 2014 and hereby incorporated by reference.
|
|
|
|
|
10.13
|
|
|
Fourth Amendment to Second Amended and Restated Loan and Security Agreement dated January 27, 2015 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.1 to the Form 8-K filed on February 2, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.14
|
|
|
Lease Agreement between Mediasite KK, as tenant, and Ollie Company as landlord, dated September 1, 2011, filed as Exhibit 10.23 to the form 10-Q filed on February 6, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.15
|
|
|
Lease Agreement between Mediasite KK, as tenant, and DSM Realty Company as landlord, dated September 1, 2005, filed as Exhibit 10.24 to the form 10-Q on February 6, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.16
|
|
|
Lease Agreement between Sonic Foundry International, as tenant, and Prinsen Geerligs as landlord, dated February 1, 2014, filed as Exhibit 10.25 to the form 10-Q on February 6, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.17
|
|
|
Fifth Amendment to Second Amended and Restated Loan and Security Agreement, dated May 13, 2015 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.26 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.18
|
|
|
Loan and Security Agreement, dated May 13, 2015 among Registrant, Sonic Foundry Media Systems, Inc. and Partners for Growth IV, L.P., filed as Exhibit 10.27 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.19
|
|
|
Warrant, dated as of May 13, 2015, between Registrant and Partners for Growth IV, L.P., filed as Exhibit 10.28 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
|
|
|
||
10.20
|
|
|
Warrant, dated as of May 13, 2015, between Registrant and Silicon Valley Bank, filed as Exhibit 10.29 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
|
|
|
||
10.21
|
|
|
Warrant dated as of May 13, 2015, between Registrant and PFG Equity Investors, LLC, filed as Exhibit 10.30 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
|
|
|
|
|
|
|
||
10.22
|
|
|
Intellectual Property Security Agreement, dated as of May 13, 2015, between Registrant and Partners for Growth IV, L.P., filed as Exhibit 10.31 to form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
|
|
|
||
10.23
|
|
|
Sixth Amendment to Second Amended and Restated Loan and Security Agreement, dated October 5, 2015 among Registrant, Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.1 to the Form 8-K filed on October 9, 2015, and hereby incorporated by reference.
|
|
|
||
10.24
|
|
|
Modification No. 1 to Loan and Security Agreement, dated September 30, 2015 among Registrant, Sonic Foundry Media Systems, Inc. and Partners for Growth IV, L.P., filed as Exhibit No. 10.2 to the Form 8-K filed on October 9, 2015, and hereby incorporated by reference.
|
|
|
|
|
10.25
|
|
|
Seventh Amendment to Second Amended and Restated Loan and Security Agreement, dated February 8, 2016 among Registrant Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit 10.28 to the Form 10-Q filed on February 11, 2016, and herby incorporated by reference.
|
|
|
|
|
10.26
|
|
|
Lease Agreement between Mediasite KK, as tenant, and Sumitomo Metal Mining Co., Ltd., as landlord, dated August 1, 2016, filed as Exhibit 10.1 to the Form 8-K filed on August 3, 2016, and hereby incorporated by reference.
|
|
|
|
|
10.27
|
|
|
Eighth Amendment to Second Amended and Restated Loan and Security Agreement, dated December 9, 2016 among Registrant Sonic Foundry Media Systems, Inc. and Silicon Valley Bank, filed as Exhibit No. 10.1 to the Form 8-K filed on December 14, 2016, and hereby incorporated by reference.
|
|
|
||
21
|
|
|
List of Subsidiaries
|
|
|
|
|
23.1
|
|
|
Consent of Baker Tilly Virchow Krause LLP, Independent Registered Public Accounting Firm
|
|
|
||
31.1
|
|
|
Section 302 Certification of Chief Executive Officer
|
|
|
||
31.2
|
|
|
Section 302 Certification of Chief Financial Officer and Secretary
|
|
|
||
32
|
|
|
Section 906 Certification of Chief Executive Officer and Chief Financial Officer and Secretary
|
|
|
||
101
|
|
|
The following materials from the Sonic Foundry, Inc. Form 10-K for the year ended September 30, 2016 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.
|
*
|
Compensatory Plan or Arrangement
|
By:
|
|
/s/ Gary R. Weis
|
|
|
Gary R. Weis
Chairman and Chief Executive Officer
|
|
|
|
Date:
|
|
December 22, 2016
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Gary R. Weis
|
|
Chief Executive Officer and Director
|
|
December 22, 2016
|
|
|
|
|
|
/s/ Kenneth A. Minor
|
|
Chief Financial Officer and Secretary
|
|
December 22, 2016
|
|
|
|
|
|
/s/ Mark D. Burish
|
|
Chair and Director
|
|
December 22, 2016
|
|
|
|
|
|
/s/ David C. Kleinman
|
|
Director
|
|
December 22, 2016
|
|
|
|
|
|
/s/ Frederick H. Kopko, Jr.
|
|
Director
|
|
December 22, 2016
|
|
|
|
|
|
/s/ Brian T. Wiegand
|
|
Director
|
|
December 22, 2016
|
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