Sonic Foundry 10Q 2022 Q3 Quarterly report

Sonic Foundry (SOFO) 10-Q2022 Q3 Quarterly report

Content analysis

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-30407

SONIC FOUNDRY, INC.

(Exact name of registrant as specified in its charter)

Maryland

39-1783372

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

222 West Washington Ave, Madison, WI 53703

(Address of principal executive offices)

(608) 443-1600

(Registrant’s telephone number including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	SOFO	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

State the number of shares outstanding of each of the issuer’s common equity as of the last practicable date:

Class

Outstanding

July 22, 2022

Common Stock, $0.01 par value

10,877,766

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PART I. FINANCIAL INFORMATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. For a more complete discussion of accounting policies and certain other information, refer to the Company’s annual report filed on Form 10-K for the fiscal year ended September 30, 2021.

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TABLE OF CONTENTS

		PAGE NO.
*PART I*	*FINANCIAL INFORMATION*	2

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4

	Condensed Consolidated Balance Sheets – June 30, 2022 and September 30, 2021	4

	Condensed Consolidated Statements of Operations – Three and Nine months ended June 30, 2022 and 2021	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Nine months ended June 30, 2022 and 2021	6

	Condensed Consolidated Statements of Stockholders' Equity - Three and Nine months ended June 30, 2022 and 2021	7

	Condensed Consolidated Statements of Cash Flows – Nine months ended June 30, 2022 and 2021	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

*PART II*	*OTHER INFORMATION*

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 6.	Exhibits	31

Signatures		33

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Item 1

Sonic Foundry, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

(Unaudited)

	*June 30,*			*September 30,*
	*2022*			*2021*
Assets
Current assets:
Cash and cash equivalents	$	4,441		$	9,989
Accounts receivable, net of allowances of $53 & $236		5,165			5,167
Inventories		1,065			442
Investment in sales-type lease, current		281			294
Capitalized commissions, current		286			360
Prepaid expenses and other current assets		1,251			1,153
Total current assets		12,489			17,405
Property and equipment:
Leasehold improvements		1,382			1,111
Computer equipment		9,665			8,527
Furniture and fixtures		1,558			1,528
Total property and equipment		12,605			11,166
Less accumulated depreciation and amortization		8,797			8,368
Property and equipment, net		3,808			2,798
Other assets:
Investment in sales-type lease, long-term		268			490
Capitalized commissions, long-term		75			76
Right-of-use assets under operating leases		2,182			2,441
Deferred tax asset		400			0
Other long-term assets		2,014			805
Total assets	$	21,236		$	24,015
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,488		$	1,072
Accrued liabilities		1,915			2,522
Current portion of unearned revenue		7,463			9,413
Current portion of finance lease obligations		22			79
Current portion of operating lease obligations		1,165			930
Current portion of warrant debt		221			0
Total current liabilities		12,274			14,016
Long-term portion of unearned revenue		1,274			1,614
Long-term portion of finance lease obligations		17			26
Long-term portion of operating lease obligations		1,102			1,583
Long-term portion of notes payable		294			556
Derivative liability, at fair value		2			53
Other liabilities		97			27
Total liabilities		15,060			17,875
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, authorized 500,000 shares; none issued		0			0
9% Preferred stock, Series A, voting, cumulative, convertible, $.01 par value (liquidation preference of $1,000 per share), authorized 4,500 shares; zero shares issued and outstanding		0			0
5% Preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued		0			0
Common stock, $.01 par value, authorized 25,000,000 shares; 10,878,739 and 9,064,821 shares issued, respectively and 10,866,023 and 9,052,105 shares outstanding, respectively		109			91
Additional paid-in capital		217,973			213,278
Accumulated deficit		(210,809	)		(206,442	)
Accumulated other comprehensive loss		(928	)		(618	)
Treasury stock, at cost, 12,716 shares		(169	)		(169	)
Total stockholders’ equity		6,176			6,140
Total liabilities and stockholders’ equity	$	21,236		$	24,015

See accompanying notes to the condensed consolidated financial statements.

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Sonic Foundry, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except for share and per share data)

(Unaudited)

	*Three Months Ended June 30,*					*Nine Months Ended June 30,*
	*2022*			*2021*		*2022*			*2021*
Revenue:
Product and other	$	2,238		$	2,659	$	6,409		$	7,406
Services		4,227		$	6,002		14,552		$	19,131
Total revenue		6,465			8,661		20,961			26,537
Cost of revenue:
Product and other		657			1,074		2,266			2,838
Services		1,250			1,548		3,825			4,770
Total cost of revenue		1,907			2,622		6,091			7,608
Gross margin		4,558			6,039		14,870			18,929
Operating expenses:
Selling and marketing		2,865			2,860		9,189			8,765
General and administrative		1,439			1,103		4,505			3,356
Product development		1,924			1,883		5,616			5,355
Total operating expenses		6,228			5,846		19,310			17,476
Income (loss) from operations		(1,670	)		193		(4,440	)		1,453
Non-operating expenses:
Interest expense, net		(9	)		10		(22	)		(42	)
Other expense, net		(161	)		19		(189	)		(8	)
Gain on debt forgiveness		0			2,325		0			2,325
Total non-operating expenses		(170	)		2,354		(211	)		2,275
Income (loss) before income taxes		(1,840	)		2,547		(4,651	)		3,728
Income tax benefit (expense)		337			99		284			(193	)
Net income (loss)	$	(1,503	)	$	2,646	$	(4,367	)	$	3,535
Dividends on preferred stock		0			0		0			0
Net income (loss) attributable to common stockholders	$	(1,503	)	$	2,646	$	(4,367	)	$	3,535
Income (loss) per common share
– basic	$	(0.14	)	$	0.33	$	(0.46	)	$	0.44
– diluted	$	(0.14	)	$	0.31	$	(0.46	)	$	0.42
Weighted average common shares
– basic		10,528,156			8,060,036		9,573,231			8,021,852
– diluted		10,528,156			8,545,156		9,573,231			8,480,856

See accompanying notes to the condensed consolidated financial statements.

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Sonic Foundry, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(Unaudited)

	*Three Months Ended June 30,*					*Nine Months Ended June 30,*
	*2022*			*2021*		*2022*			*2021*
Net income (loss)	$	(1,503	)	$	2,646	$	(4,367	)	$	3,535
Other comprehensive income (loss)
Foreign currency translation adjustment		(133	)		7		(310	)		(120	)
Comprehensive income (loss)	$	(1,636	)	$	2,653	$	(4,677	)	$	3,415

See accompanying notes to the condensed consolidated financial statements.

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Sonic Foundry, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands)

(Unaudited)

										*Accumulated*
					*Additional*					*other*
	Preferred		Common		paid-in		Accumulated			comprehensive			Treasury
	*stock*		*stock*		*capital*		*deficit*			*loss*			*stock*			*Total*
Balance, September 30, 2020	$	0	$	80	$	209,022	$	(209,519	)	$	(462	)	$	(169	)	$	(1,048	)
Stock compensation		0		0		375		0			0			0			375
Issuance of common stock		0		0		50		0			0			0			50
Stock option exercise		0		1		246		0			0			0			247
Foreign currency translation adjustment		0		0		0		0			(120	)		0			(120	)
Net income		0		0		0		3,535			0			0			3,535
Balance, June 30, 2021	$	0	$	81	$	209,693	$	(205,984	)	$	(582	)	$	(169	)	$	3,039

										*Accumulated*
					*Additional*					*other*
	Preferred		Common		paid-in		Accumulated			comprehensive			Treasury
	*stock*		*stock*		*capital*		*deficit*			*loss*			*stock*			*Total*
Balance, March 31, 2021	$	0	$	81	$	209,523	$	(208,630	)	$	(589	)	$	(169	)	$	216
Stock compensation		0		0		92		0			0			0			92
Issuance of common stock		0		0		40		0			0			0			40
Stock option exercise		0		0		38		0			0			0			38
Foreign currency translation adjustment		0		0		0		0			7			0			7
Net income		0		0		0		2,646			0			0			2,646
Balance, June 30, 2021	$	0	$	81	$	209,693	$	(205,984	)	$	(582	)	$	(169	)	$	3,039

										*Accumulated*
					*Additional*					*other*
	Preferred		Common		paid-in		Accumulated			comprehensive			Treasury
	*stock*		*stock*		*capital*		*deficit*			*loss*			*stock*			*Total*
Balance, September 30, 2021	$	0	$	91	$	213,278	$	(206,442	)	$	(618	)	$	(169	)	$	6,140
Stock compensation		0		0		609		0			0			0		$	609
Issuance of common stock		0		17		3,981		0			0			0		$	3,998
Stock option exercise		0		1		106		0			0			0		$	107
Foreign currency translation adjustment		0		0		0		0			(310	)		0		$	(310	)
Net loss		0		0		0		(4,367	)		0			0		$	(4,367	)
Balance, June 30, 2022	$	0	$	109	$	217,973	$	(210,809	)	$	(928	)	$	(169	)	$	6,176

										*Accumulated*
					*Additional*					*other*
	Preferred		Common		paid-in		Accumulated			comprehensive			Treasury
	*stock*		*stock*		*capital*		*deficit*			*loss*			*stock*			*Total*
Balance, March 31, 2022	$	0	$	91	$	213,812	$	(209,306	)	$	(795	)	$	(169	)	$	3,633
Stock compensation		0		0		200		0			0			0			200
Issuance of common stock		0		17		3,961		0			0			0			3,978
Foreign currency translation adjustment		0		0		0		0			(133	)		0			(133	)
Net loss		0		0		0		(1,503	)		0			0			(1,503	)
Balance, June 30, 2022	$	0	$	109	$	217,973	$	(210,809	)	$	(928	)	$	(169	)	$	6,176

See accompanying notes to the condensed consolidated financial statements.

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Sonic Foundry, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	*Nine Months Ended*
	*June 30,*
	*2022*			*2021*
Operating activities
Net income (loss)	$	(4,367	)	$	3,535
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of other intangible		0			42
Amortization of warrant debt, debt discount and debt issuance costs		23			0
Depreciation and amortization of property and equipment		861			773
Deferred income taxes		(400	)		0
Loss on sale of fixed assets		166			6
Provision for doubtful accounts		(50	)		0
Stock-based compensation expense related to stock options		609			375
Stock issued for board of director fees		49			40
Remeasurement (gain) on derivative liability		(51	)		(3	)
Gain on debt forgiveness		0			(2,325	)
Changes in operating assets and liabilities:
Accounts receivable		(177	)		592
Inventories		(634	)		712
Investment in sales-type lease		128			1
Capitalized commissions		75			171
Prepaid expenses and other current assets		(241	)		114
Right-of-use assets under operating leases		124			(792	)
Operating lease obligations		(100	)		795
Other long-term assets		386			(395	)
Accounts payable and accrued liabilities		410			(2,042	)
Other long-term liabilities		91			(106	)
Unearned revenue		(1,991	)		(2,290	)
Net cash used in operating activities		(5,089	)		(797	)
Investing activities
Purchases of property and equipment		(2,337	)		(619	)
Capitalization of software development costs		(1,681	)		0
Net cash used in investing activities		(4,018	)		(619	)
Financing activities
Payments on notes payable		0			(935	)
Proceeds from issuance of common stock		3,948			10
Proceeds from exercise of common stock options		107			247
Payments on finance lease obligations		(62	)		(98	)
Net cash provided by (used in) financing activities		3,993			(776	)
Changes in cash and cash equivalents due to changes in foreign currency		(434	)		18
Net decrease in cash and cash equivalents		(5,548	)		(2,174	)
Cash and cash equivalents at beginning of year		9,989			7,619
Cash and cash equivalents at end of period	$	4,441		$	5,445
Supplemental cash flow information:
Interest paid	$	2		$	32
Income taxes paid, foreign		78			84
Non-cash financing and investing activities:
Property and equipment financed by finance lease or accounts payable		120			0

See accompanying notes to the condensed consolidated financial statements.

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Sonic Foundry, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2022

(Unaudited)

1.	Basis of Presentation and Significant Accounting Policies

Business

Sonic Foundry, Inc. (the "Company") is the global leader for video capture, management, and streaming solutions as well as virtual and hybrid events. Trusted by thousands of educational institutions, corporations, health organizations and government entities in over 65 countries with solutions that transform communication, training, and learning. Sonic Foundry’s brands include Mediasite®, Mediasite Connect, Vidable™ and Global Learning Exchange™.

Financial Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared on a basis substantially consistent with the Company's audited financial statements as of and for the year ended September 30, 2021 included in the Company's Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended June 30, 2022 are not necessarily indicative of the results that might be expected for the year ending September 30, 2022. The September 30, 2021 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Impacts of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.  While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration, severity and impact of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as those of our key business partners, vendors and other counterparties for an indefinite period of time. The Company continues to follow guidelines outlined by the CDC and local county protocol. On August 2, 2021, the Company returned to in-person working. The Company implemented a hybrid module to allow employees to work 60% in office and 40% from home.

COVID-19 has had negative impacts on our operations and the future impacts of the pandemic and any corresponding economic results are largely unknown and rapidly evolving. The Company has implemented new products and new approaches to deliver existing products to grow revenue.  In response to the cancellations of in-person events, the Company introduced a new virtual events platform as an alternate solution for our customers. In addition, the Company is confident the pandemic will accelerate the Company's new product strategy.

Investment in Sales-Type Lease

The Company has entered into sales-type lease arrangements with certain customers, consisting of recorders leased with terms ranging from 3-5 years.

Investment in sales-type leases consists of the following (in thousands) as of June 30, 2022:

Investment in sales-type lease, gross:
2022	$	147
2023		167
2024		167
2025		68
Gross investment in sales-type lease		549
Less: Unearned income		0
Total investment in sales-type lease	$	549

Current portion of total investment in sales-type lease	$	281
Long-term portion of total investment in sales-type lease		268

549

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Inventory

Inventory consists of raw materials and supplies used in the assembly of Mediasite recorders and finished units. Inventory of completed units and spare parts are carried at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. An obsolescence reserve has been established to account for slow moving inventory.

Inventory consists of the following (in thousands):

	*June 30,*			*September 30,*
	*2022*			*2021*
Raw materials and supplies	$	178		$	301
Finished goods		993			247
Less: Obsolescence reserve		(106	)		(106	)
	$	1,065		$	442

Asset Retirement Obligation

An asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset is recognized as a liability in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of the related long-term asset. The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset. As of June 30, 2022 and September 30, 2021, the Company has recorded a liability of $81 thousand and $129 thousand, respectively, for retirement obligations associated with returning the MSKK leased property to the respective lessors upon the termination of the lease arrangement. At September 30, 2021, asset retirement obligations were included in short-term liabilities and paid off during Q1 2022. A new asset retirement obligation was recorded for the new MSKK office lease and is included in other-long term liabilities on the condensed consolidated balance sheets.

Fair Value of Financial Instruments

In determining the fair value of financial assets and liabilities, the Company currently utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market, and adjusts for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible to the Company at the measurement date.

Level 2 Inputs: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3.

Financial Liabilities Measured at Fair Value on Recurring Basis

The fair value of the bifurcated conversion feature represented by the warrant derivative liability associated with the PFG debt is measured at fair value on a recurring basis based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described for share-based compensation which were generally observable (Level 2).

Financial liabilities measured at fair value on a recurring basis are summarized below (in thousands):

June 30, 2022		*Level 1*				*Level 2*				*Level 3*				*Total Fair Value*
Derivative liability		$	0			$	2			$	0			$	2

September 30, 2021		*Level 1*				*Level 2*				*Level 3*				*Total Fair Value*
Derivative liability		$	0			$	53			$	0			$	53

The gain or loss related to the fair value remeasurement on the derivative liability is included in the other expense line on the condensed consolidated statements of operations.

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Financial Liabilities Measured at Fair Value on a Non-Recurring Basis

The initial fair values of PFG debt and warrant debt (see Note 4) were based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3).

Financial Instruments Not Measured at Fair Value

The Company's other financial instruments consist primarily of cash and cash equivalents, accounts receivable, investment in sales-type lease, accounts payable, debt instruments and lease obligations. The book values of cash and cash equivalents, accounts receivable, investment in sales-type lease, and accounts payable are considered to be representative of their respective fair values due to their short term nature. The carrying value of debt, including the current portion, approximates fair market value as the variable and fixed rate approximates the current market rate of interest available to the Company.

Legal Contingencies

When legal proceedings are brought or claims are made against the Company and the outcome is uncertain, we are required to determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings.

NaN legal contingencies were recorded or were required to be disclosed for the three or nine months ended June 30, 2022 or 2021.

Software Development Cost

Software development costs incurred in conjunction with product development are charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs are capitalized and reported at the net realizable value of the related product. Until the first quarter of 2022, the period between achieving technological feasibility of the Company’s products and the general availability of the products has been short. During the three months ended June 30, 2022 and nine months ended June 30, 2022, the Company capitalized approximately $727 thousand and $1.7 million, respectively, in software development costs related to new products as technological feasibility was established during the period, and this is included in other long term assets on the balance sheet.

Stock Based Compensation

The Company uses a lattice valuation model to account for all employee stock options granted. The lattice valuation model is a more flexible analysis to value options because of its ability to incorporate inputs that change over time, such as actual exercise behavior of option holders. The Company uses historical data to estimate the option exercise and employee departure behavior in the lattice valuation model. Expected volatility is based on historical volatility of the Company’s stock. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods the options are expected to be outstanding is based on the U.S. Treasury yields in effect at the time of grant. Forfeitures are based on actual behavior patterns. The expected exercise factor and forfeiture rates are calculated using historical exercise and forfeiture activity for the previous three years. There are a number of options subject to performance vesting. The Company evaluates these options on a quarterly basis to assess the probability of vesting. Compensation costs are recorded for options that are probable of vesting.

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The fair value of each option grant is estimated using the assumptions in the following table:

	*Nine Months Ended*
	*June 30,*
	*2022*		*2021*
Expected life (in years)		5.0 - 5.3		4.3 - 4.7
Risk-free interest rate		1.07 - 2.79%		0.33% - 0.58%
Expected volatility		64.83% - 66.31%		65.23% -83.29%
Expected forfeiture rate		14.65% - 18.15%		14.18% - 16.41%
Expected exercise factor		2.0		1.2
Expected dividend yield		0.00%		0.00%

A summary of option activity at June 30, 2022 and changes during the nine months then ended is presented below:

				Weighted-		Weighted-Average
				Average		Remaining Contractual
	Options			Exercise Price		Period in Years
Outstanding at October 1, 2021		1,853,479		$	4.44		4.60
Granted		874,250			3.20		9.87
Exercised		(150,764	)		2.08		5.10
Forfeited and cancelled		(422,085	)		6.13		—
Outstanding at June 30, 2022		2,154,880		$	3.79		8.44
Exercisable at June 30, 2022		1,083,331		$	4.34		6.73

A summary of the status of the Company’s non-vested options and changes during the nine month period ended June 30, 2022 is presented below:

				*Weighted-Average*
				*Grant Date Fair*
Non-vested Options	*Options*			*Value*
Non-vested at October 1, 2021		583,458		$	1.40
Granted		874,250			1.42
Vested		(318,422	)		1.05
Forfeited		(67,737	)		1.38
Non-vested at June 30, 2022		1,071,549		$	1.51

The weighted average grant date fair value of options granted during the nine months ended June 30, 2022 was $1.42. As of June 30, 2022, there was $1.2 million of total unrecognized compensation cost related to non-vested stock-based compensation, with total forfeiture adjusted unrecognized compensation cost of $857 thousand. The cost is expected to be recognized over a weighted-average remaining life of 2.2 years.

Stock-based compensation expense for stock options recorded in the three and nine months ended June 30, 2022 was $197 thousand and $601 thousand, respectively. Stock-based compensation expense recorded in three months and nine months ended June 30, 2021 was $82 thousand and $365 thousand, respectively. There was less than $1 thousand and $107 thousand in cash received from transactions under all stock option plans during the three and nine months ended June 30, 2022 respectively, and $59 thousand and $247 thousand during the three and nine months ended June 30, 2021. There were 0 tax benefits realized for tax deductions from option exercises in either of the three or nine month periods ended June 30, 2022 or 2021. The Company currently expects to satisfy share-based awards with registered shares available to be issued.

The Company also has an Employee Stock Purchase Plan ("Purchase Plan") under which an aggregate of 300,000 common shares may be issued. A total of 92,057 shares are available to be issued under the plan at June 30, 2022.The Company recorded stock compensation expense under this plan of $2 thousand and $8 thousand for the three and nine month periods ended June 30, 2022 compared to $1 thousand and $6 for the three and nine month periods ended June 30, 2021. Cash received for the issuance of shares under the Purchase Plan in the three and nine month periods ended June 30, 2022 was $0 thousand and $19 thousand compared to $0 thousand and $9 thousand for the three and nine month periods ended June 30, 2021.

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Preferred Stock and Dividends

NaN shares of Preferred Stock, Series A and Series B were issued and outstanding as of June 30, 2022 and 2021.

Common Stock Transactions

On July 20, 2021, the Company entered into a transaction with four investors on identical terms pursuant to which they agreed to purchase, and the Company agreed to issue and sell, an aggregate of 945,946 shares at a price of $3.70 per share (total of $3,500,000). The Company closed on the issuance and sale on July 27, 2021. The Company and the investors also entered into (i) warrant agreements pursuant to which the investors have the right to purchase 141,892 shares at a price of $5.50 per share on or before July 20, 2026 and, (ii) registration rights agreements (“Rights Agreement”) whereby the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission (the “Commission”) within six months after the effective date of the Rights Agreement and further agreed to use its commercially reasonable efforts to have the registration statement declared effective and to ensure that the registration statement remains effective throughout the term of the Rights Agreement.

The investors above included Mr. Mark Burish, the Company’s chairman and largest shareholder who purchased $1,250,000 of common stock for a total of 337,838 shares and 50,676 warrants. The Company’s special committee of disinterested directors met several times to discuss and negotiate the terms of the above transactions, including the participation of Mr. Burish. The special committee unanimously approved such terms.

On April 13, 2022, the Company announced an underwritten public offering of 1,700,000 shares of its common stock at a public offering price of $2.55 per share. The company granted the underwriter a 45-day option to purchase up to an additional 255,000 shares of common stock at the public offering price, less underwriting discounts and commissions.

None of the options were exercised and the 45-day option period has expired. The Company also issued Underwriter' Warrants that grants the underwriter the right to purchase an aggregate of 6% of the shares of common stock issued in the offering or total of 102, 000 shares.

The Underwriters’ Warrants shall be exercisable, in whole or in part, commencing 181 days after April 13, 2022 and expiring on the five-year anniversary of the date on which the Underwriters’ Warrants first become exercisable, at an initial exercise price of $3.06 per share.

On April 19, 2022, the public offering closed. Gross proceeds from the sale of 1,700,000 shares before deducting underwriting discounts and commissions and other offering expenses were approximately $4.3 million. Cost associated with the offering was $406 thousand consisting of finders fees, underwriting fees, legal fees, accounting service fees, and transfer agent closing fees.

Uplisting to Nasdaq Capital Market

On January 24, 2022 the Company announced that the Nasdaq Stock Market LLC (“Nasdaq”) had approved its application for uplisting the Company’s common stock to the Nasdaq Capital Market. Sonic Foundry’s common stock commenced trading on the Nasdaq Capital Market at the opening of the market on Tuesday, January 25, 2022, under the Company’s former ticker symbol “SOFO.”

Increase in Authorized Shares of Common Stock

On February 2, 2022 the Company's Board of Directors approved a resolution to increase the authorized number of shares of common stock of the Company, par value $.01 per share, from 15,000,000 to 25,000,000.

Per Share Computation

Basic earnings (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period, and excludes any dilutive effects of options and warrants. In periods where the Company reports net income, diluted net income per share is computed using common equivalent shares related to outstanding options and warrants to purchase common stock. The numerator for the calculation of basic and diluted earnings per share is net income (loss) attributable to common stockholders. The following table sets forth the computation of basic and diluted weighted average shares used in the earnings per share calculations:

	*Three Months Ended*				*Nine Months Ended*
	*June 30,*				*June 30,*
	*2022*		*2021*		*2022*		*2021*
Denominator for basic net income (loss) per share - weighted average common shares		10,528,156		8,060,036		9,573,231		8,021,852
Effect of dilutive options and warrants (treasury method)		0		485,120		0		459,004
Denominator for diluted net income (loss) per share - adjusted weighted average common shares		10,528,156		8,545,156		9,573,231		8,480,856
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net loss per share because they are antidilutive		2,697,330		1,078,832		2,697,330		1,291,332

Liquidity

At June 30, 2022, approximately $1.9 million of cash and cash equivalents was held by the Company's foreign subsidiaries.

The Company completed a common stock issuance to certain investors totaling $3.5 million, net of $88 thousand expenses, on July 27, 2021. The proceeds of the stock issuance were intended to satisfy the initial listing requirements of the Nasdaq Capital Market. On April 19, 2022, the Company closed a public offering of common stock issuance of totaling $4.3 million, net of $406 thousand expenses. The proceeds of the stock issuance will be invested in the Company's new products, GLX and Vidable.

The Company evaluates lease opportunities to finance equipment purchases in the future and support working capital needs and will likely seek additional financing opportunities. However, there are no assurances that these will be on terms acceptable to the Company.

The Company believes its cash position plus available resources is adequate to accomplish its business plan through at least the next 12 months.

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Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", ("ASU 2016-13"). The amendments in this ASU affect entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments are effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statement have not yet issued. The Company is currently evaluating the guidance and its impact to the financial statements.

Accounting standards that have been issued but are not yet effective by the FASB or other standards-setting bodies that do not require adoption until a future date, which are not discussed above, are not expected to have a material impact on the Company’s financial statements upon adoption.

Recent Adopted Accounting Pronouncements

Income Taxes (ASC Topic 740)

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", ("ASU 2019-12"). On October 1, 2021, the company adopted ASU 2019-12. The implementation of this standard did not result in a material impact to the Company's consolidated financial statements.

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2. Related Party Transactions

During the three and nine months ended June 30, 2022, the Company incurred fees of $46 thousand and $103 thousand as legal expense to a law firm, a partner of which is a director and stockholder of the Company. The Company incurred similar fees of $30 thousand and $91 thousand during the three and nine months ended June 30, 2021, respectively. The Company had recorded liabilities of $9 thousand and $16 thousand for unbilled services to the same law firm at June 30, 2022 and September 30, 2021, respectively.

Mr. Burish beneficially owns 37% of the Company’s common stock. Mr. Burish also serves as the Chairman of the Board of Directors. All transactions with Mr. Burish were approved by a Special Committee of Disinterested and Independent Directors.

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3. Commitments

Purchase Commitments

The Company enters into unconditional purchase commitments on a regular basis for the supply of Mediasite product for hardware inventory, as well as services to support our hosting environment, which are not recorded on the Company's condensed consolidated balance sheet. At June 30, 2022, the Company had an obligation to purchase $1.1 million of Mediasite product and $54 thousand of services during fiscal 2022, and $3.3 million of Mediasite product and $166 thousand of services during fiscal 2023.

Leases

The Company has operating leases for corporate office space with various expiration dates. Our leases have remaining lease terms of up to three years, some of which include escalation clauses, renewal options for up to twelve years or termination options within one year.

We determine if an arrangement is a lease upon contract inception. The Company has both operating and finance leases. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments according to the arrangement.

A contract contains a lease if the contract conveys the right to control the use of the identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

Lease right-of-use assets and lease liabilities are recognized as of the commencement date based on the present value of the lease payments over the lease term. The lease right-of use asset is reduced for tenant incentives and includes any initial direct costs incurred. We use the implicit interest rate when it is readily determinable. Otherwise, the present value of future minimum lease payments is determined using the Company's incremental borrowing rate. The incremental borrowing rate is based on the interest rate of the Company's most recent borrowing.

The lease term we use for the valuation of our right-of-use assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense is recognized on a straight-line basis over the expected lease term for operating leases. Amortization expense of the right-of-use asset for finance leases is recognized on a straight-line basis over the lease term and interest expense for finance leases is recognized based on the incremental interest rate.

Right-of-use assets and lease liabilities are recognized for our leases. Right-of-use assets under finance leases are included in property and equipment on the condensed consolidated balance sheets and have a net carrying value of $90 thousand at September 30, 2021 and$30 thousandat June 30, 2022.

We have operating lease arrangements with lease and non-lease components. The non-lease components in our arrangements are not significant when compared to the lease components. For all operating leases, we account for the lease and non-lease components as a single component.

Effective June 2021, the Company renewed its building leases on its headquarters with a two and half years term starting January 1, 2022. Monthly rent payments will be $56 thousand in year 1 and increase annually at an escalation rate of 4.30% in year 2 and 3.30% in year 3. In June 2021, the Company was granted a monthly rent credit of $53 thousand for the period from April 2021 to September 2021. The Company treated the rent credit as variable lease payments for the periods effected.

As of June 30, 2022, future maturities of operating and finance lease liabilities for the fiscal years ended September 30 are as follows (in thousands):

	*Operating Leases*			*Finance Leases*
2022 (remaining)	$	292		$	15
2023		1,204			10
2024		742			8
2025		20			4
2026		13			3
Thereafter		47			0
Total		2,318			40
Less: imputed interest		(51	)		(1	)
Total	$	2,267		$	39

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Supplemental information related to leases is as follows (in thousands, except lease term and discount rate):

	*Three Months Ended*					*Nine Months Ended*
	*June 30,*					*June 30,*
	*2022*		*2021*			*2022*		*2021*
Operating lease costs	$	308	$	383		$	1,072	$	1,107
Variable operating lease costs		2		(143	)		23		(110	)
Total operating lease cost	$	310	$	240		$	1,095	$	997

Finance lease cost:
Amortization of right-of-use assets	$	19	$	(33	)	$	59	$	47
Interest on lease liabilities		0		0			3		8
Total finance lease cost	$	19	$	(33	)	$	62	$	55

Variable lease costs include operating costs for U.S. office lease based on square footage and Consumer Price Index ("CPI") rent escalation and related VAT for office lease in the Netherlands, and COVID-19 rent credit.

Supplemental cash flow information related to operating and finance leases were as follows (in thousands):

	*Nine Months Ended June 30, 2022*		*Nine Months Ended June 30, 2021*
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	984	$	956
Operating cash outflows for finance leases		3		8
Financing cash outflows for finance leases		62		98

Other information related to leases was as follows:

	*June 30, 2022*			*June 30, 2021*
Weighted average remaining lease term (in years)
Operating leases		2.2			3.0
Finance leases		2.3			1.5
Weighted average discount rate
Operating leases		2.11	%		4.00	%
Finance leases		4.52	%		7.28	%

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4. Credit Arrangements

Partners for Growth V, L.P.

On May 11, 2018, Sonic Foundry, Inc., entered into a Loan and Security Agreement (the “2018 Loan and Security Agreement”) with Partners for Growth V, L.P. (“PFG V”).

The 2018 Loan and Security Agreement provides for a Term Loan ("Term Loan") in the amount of $2,500,000, which was disbursed in two (2) Tranches as follows: Tranche 1 was disbursed on May 14, 2018 in the amount of $2,000,000; and Tranche 2 in the amount of $500,000, was disbursed on November 8, 2018. Each tranche of the Term Loan accrued interest at 10.75% per annum. Tranche 1 of the Term Loan was payable interest only until November 30, 2018. Thereafter, principal was due in 30 equal monthly principal installments, plus accrued interest, beginning December 1, 2018 and continuing until May 1, 2021, when the principal balance was due in full. Tranche 2 of the Term Loan was payable using the same repayment schedule as Tranche 1. Upon maturity, Sonic Foundry was required to pay PFG V a cash fee of $150,000. The principal of the Term Loan may have been prepaid at any time without penalty as of May 14, 2019. The Term Loan was collateralized by substantially all the Company’s assets, including intellectual property. Both tranches and the $150,000 fee were paid off in May 2021.

Coincident with execution of the 2018 Loan and Security Agreement, the Company entered into a Warrant Agreement (“Warrant”) with PFG V. Pursuant to the terms of the Warrant, the Company issued to PFG V a warrant to purchase up to 66,000 shares of common stock of the Company at an exercise price of $2.57 per share, subject to certain adjustments. Pursuant to the Warrant, PFG V is also entitled, under certain conditions, to require the Company to exchange the Warrant for the sum of $250,000. All warrants issued in connection with PFG V expire on May 11, 2023.

At June 30, 2022, and September 30, 2021, the estimated fair value of the derivative liability associated with the warrants issued in connection with the 2018 Loan and Security Agreement, was $2 thousand and $53 thousand, respectively. Included in other expense, the remeasurement gain on the derivative liability during the three and nine months ended June 30, 2022 was $21 thousand and $51 thousand compared to remeasurement gain of $22 thousand and $3 thousand during the three and nine months ended June 30, 2021, respectively.

The proceeds from the 2018 Loan and Security Agreement were allocated between the PFG V Debt and the Warrant Debt (inclusive of its conversion feature) based on their relative fair value on the date of issuance which resulted in carrying values of $2.3 million and $156 thousand, respectively. The warrant debt is treated together as a debt discount on the PFG V Debt and is being accreted to interest expense under the effective interest method over the three-year term of the PFG V Debt and the five-year term of the Warrant Debt. During the three and nine months ended June 30, 2022, the Company recorded accretion of discount expense associated with the warrants issued with the PFG V loan of $8 thousand and $23 thousand, respectively, compared to $4 thousand and $7 thousand in the same periods last year. The carrying balance of the Warrant Debt at June 30, 2022 and September 31, 2021 was $221 thousand and $198 thousand, respectively.

In addition,0 amortization of the debt discount was recorded during the three and nine months ended June 30, 2022 due to debt being paid off in May 2021, compared to $6 thousand and $34 thousand during the three and nine months ended June 30, 2021. During the three and nine months ended June 30, 2022 the Company recorded interest expense of $0 thousand associated with recognition of the back-end fee compared to $6 thousand and $31 thousand during the three and nine months ended June 30, 2021.

The non-cash effective interest expense is calculated on the net balance of the PFG V Debt, debt discount, back-end fee and related loan origination fees, on a monthly basis. Due to debt and back-end fees being paid off, non-cash interest expense of $0 thousand was recorded during the three and nine months ended June 30, 2022, compared to $11 thousand and $53 thousand, respectively, during the same periods last year.

At June 30, 2022 and September 30, 2021, there was 0 balance outstanding on the term debt with PFG V.

Paycheck Protection Program (PPP) Loan Dated April 20, 2020

Following the approval of the Board of Directors, the Company and First Business Bank entered into a $2.3 million Promissory Note (the "Promissory Note") under the Paycheck Protection Program (PPP) contained within the new Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP loan had a term of two years for those companies receiving loan proceeds prior to June 5, 2020, was unsecured, and was guaranteed by the U.S. Small Business Administration ("SBA"). The loan carried a fixed interest rate of 1% per annum. Under the terms of the CARES Act, the Company was eligible for and submitted its application for forgiveness of all loan proceeds on March 2, 2021. On June 14, 2021 the Company received SBA approval of forgiveness for the loan principal of $2,314,815 and $26,382 in interest.

When the PPP Loan was received, US GAAP guidance for debt (ASC 470) was followed by the Company. A liability was recognized and interest was accrued over the term of the loan. Therefore, according to the guidance, the amount forgiven is recorded as gain from forgiveness of debt, and the gain from forgiveness is presented on its own line within the statement of operations as other income in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021 and Form 10-Q for the periods ended June 30, 2022 and 2021.

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Line of Credit dated July 28, 2021

The Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association (the “Bank”) on July 28, 2021. Under the Credit Agreement the Company may borrow the lesser of $3,000,000 or the applicable Borrowing Base comprised of (1) 80% of Qualified Accounts Receivable; (2) 50% of Qualified Inventory; and (3) an available over-advance of $500,000.

The Credit Agreement matures on March 31, 2023, is secured by all assets of the Company and accrued interest equal to the one-month LIBOR rate plus 1.35% per annum, paid monthly. The Credit Agreement required compliance with typical warranties and covenants including financial covenants of (1) Fixed Charge Coverage Ratio, as defined in the agreement, of at least 1.20:1 at the end of each quarter and (2) Senior Cash Flow Coverage Ratio, as defined in the agreement, of no more than 3.00:1 for each fiscal quarter, until these provisions were removed with the March 30, 2022 amendment. There was $0 outstanding on the line of credit at June 30, 2022 and September 30, 2021.

In connection with the Credit Agreement, the Company entered into the Stock Pledge Agreement with the Bank, as a condition of the Credit Loan. Upon default, the Bank shall have the right to transfer and claim the securities of the subsidiaries, Sonic Foundry International B.V. in Netherland and Mediasite K.K. in Japan.

Amendment to Line of Credit dated March 30, 2022

The Company entered into an amendment to the Credit Agreement with U.S. Bank National Association on March 30, 2022. Under the Credit Agreement, the Company may borrow from the Bank, for general and working capital purposes, an aggregate amount outstanding at any one time of $3,000,000 at an annual rate equal to 1.45% plus the greater of (i) zero percent (0.0%) and (ii) the one-month forward-looking term rate based on SOFR quoted by Bank from the Term SOFR Administrator’s Website. The Amendment also, among other things, extended the maturity date from July 28, 2022 to March 31, 2023.

In connection with the Credit Agreement, the Company is also required to maintain a collateral account with the Bank in the name of the Company but under the sole control of the Bank. As a condition to drawing on the Revolving Credit Loan, the Company will deposit into the Collateral Account funds in an amount equal to the amount of principal the Company wishes to draw on the Revolving Credit Loan. Previous covenants and borrowing base requirements were removed as part of this amendment.

Other Indebtedness.

Mediasite K.K. had a line of credit with Mitsui Sumitomo Bank, allowing borrowings up to approximately $410 thousand. The line of credit matured on February 28, 2022 and was not renewed. There was 0 outstanding balance as of September 30, 2021.

On August 20, 2020, Mediasite K.K. and Sumitomo Mitsui Banking Corporation entered into a $379 thousand Promissory Note under an initiative by the Japanese Finance Corporation government institution in response to the Cabinet Decision entitled "Emergency Economic Measures to Cope With COVID-19." Extending financial relief to organizations impacted by COVID-19, the loan has a term of three years and carries a fixed interest rate of 0.46% per annum. Government subsidies provided through the Japanese Finance Corporations provide interest relief throughout the term of the loan. In addition, the loan agreement includes a three year grace period with principal payments deferred through the end of the loan, which is September 30, 2023. As of June 30, 2022 the full principal amount of the loan has been included in long-term notes payable.

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5. Income Taxes

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has net operating losses (NOL) carried over from previous years. Therefore, the Company had no accruals for interest and penalties on the Company’s Condensed Consolidated Balance Sheets at June 30, 2022 or September 30, 2021, and has not recognized any interest or penalties in the Condensed Consolidated Statements of Operations for either of the three or nine months ended June 30, 2022 or 2021.

The Company’s tax rate differs from the expected tax rate each reporting period as a result of permanent differences, the valuation allowance, international tax items, and forgiveness of the PPP loan. The Company's income tax expense for the three and nine months ended June 30, 2022 and 2021 primarily consists of income tax expense/benefit at its foreign subsidiaries.

Valuation allowance for net deferred tax assets

Deferred tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. We do not provide for U.S. income taxes on the undistributed earnings of our foreign subsidiaries, which we consider to be permanently invested outside of the U.S.

We make judgments regarding the realizability of our deferred tax assets. The balance sheet carrying value of our net deferred tax assets is based on whether we believe that it is more likely than not that we will generate sufficient future taxable income to realize these deferred tax assets after consideration of all available evidence. We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses. Generally, cumulative losses in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed.

As of September 30, 2021, valuation allowances have been established for all U.S. and for certain foreign deferred tax assets which we believe do not meet the “more likely than not” criteria for recognition. As of June 30, 2022, the Company recorded a deferred tax asset in the amount of $400 thousand on the balance sheet relating to foreign net operating losses that the Company believes is "more likely than not" to be realized before expiration of the foreign net operating loss income tax benefit. In prior periods, the foreign deferred tax was immaterial and recorded within other long-term assets.

If we are subsequently able to utilize all or a portion of the deferred tax assets for which a valuation allowance has been established, then we will be required to recognize these deferred tax assets through the reduction of the valuation allowance, which could result in a material benefit to our results of operations in the period in which the benefit is determined.

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6. Revenue

Disaggregation of Revenues

The following tables summarize revenues from contracts with customers for the three and nine months ended June 30, 2022 and 2021, respectively, (in thousands) by subsidiary, which includes the parent (SOFO), our Netherlands location (SFI) and our Japanese location (MSKK) :

*Three months ended June 30, 2022*
	*SOFO*		*SFI*		*MSKK*		*Eliminations*			*Total*

Revenue:

Hardware	$	1,406	$	71	$	0	$	(34	)	$	1,443
Software		495		121		255		(121	)		750
Shipping		43		2		0		0			45

Product and other total		1,944		194		255		(155	)		2,238

Support		1,176		127		240		(186	)		1,357
Hosting		1,471		153		287		(216	)		1,695
Events		784		16		318		0			1,118
Installs, training & other		46		6		5		0			57

Services total		3,477		302		850		(402	)		4,227

Total revenue	$	5,421	$	496	$	1,105	$	(557	)	$	6,465

*Nine Months Ended June 30, 2022*
	SOFO		SFI		MSKK		Eliminations			Total

Revenue:

Hardware	$	4,094	$	395	$	243	$	(358	)	$	4,374
Software		1,456		329		384		(258	)		1,911
Shipping		117		7		0		0			124

Product and other total		5,667		731		627		(616	)		6,409

Support		3,816		383		1,181		(503	)		4,877
Hosting		4,398		684		876		(650	)		5,308
Events		2,450		44		1,029		0			3,523
Installs, training & other		217		478		149		0			844

Services total		10,881		1,589		3,235		(1,153	)		14,552

Total revenue	$	16,548	$	2,320	$	3,862	$	(1,769	)	$	20,961

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*Three months ended June 30, 2021*
	*SOFO*		*SFI*		*MSKK*		*Eliminations*			*Total*

Revenue:

Hardware	$	1,635	$	179	$	185	$	(297	)	$	1,702
Software		595		123		295		(76	)		937
Shipping		18		2		0		0			20

Product and other total		2,248		304		480		(373	)		2,659

Support		1,623		159		202		(222	)		1,762
Hosting		1,472		282		438		(169	)		2,023
Events		1,265		32		448		0			1,745
Installs, training & other		55		1		416		0			472

Services total		4,415		474		1,504		(391	)		6,002

Total revenue	$	6,663	$	778	$	1,984	$	(764	)	$	8,661

*Nine Months Ended June 30, 2021*
	*SOFO*		*SFI*		*MSKK*		*Eliminations*			*Total*

Revenue:

Hardware	$	4,103	$	522	$	962	$	(745	)	$	4,842
Software		2,035		343		469		(332	)		2,515
Shipping		45		4		0		0			49

Product and other total		6,183		869		1,431		(1,077	)		7,406

Support		5,122		483		679		(640	)		5,644
Hosting		4,320		788		1,566		(232	)		6,442
Events		3,102		79		1,850		0			5,031
Installs, training & other		744		28		1,242		0			2,014

Services total		13,288		1,378		5,337		(872	)		19,131

Total revenue	$	19,471	$	2,247	$	6,768	$	(1,949	)	$	26,537

Transaction price allocated to future performance obligations

As of June 30, 2022, the aggregate amount of the transaction price that is allocated to our future performance obligations was approximately $3.1 million in the next three months, $7.5 million in the next twelve months and $1.3 million thereafter.

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Disclosures related to our contracts with customers

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current unearned revenue.

Unearned revenues

Unearned revenues represent our obligation to transfer products or services to our client for which we have received consideration, or an amount of consideration is due, from the client. During the three and nine months ended June 30, 2022, revenues recognized related to the amount included in the unearned revenues balance at the beginning of the period was $2.0 million and $8.5 million compared to $2.0 million and $9.1 million recognized during the three and nine months ended June 30, 2021.

Assets recognized from the costs to obtain our contracts with customers

We recognize an asset for the incremental costs of obtaining a contract with a customer. We amortize these deferred costs, primarily capitalized commissions, proportionate with related revenues over the period of the contract. During the three and nine months ended June 30, 2022, amortization expense related to the amount included in the capitalized commissions at the beginning of the period was $85 thousand and $346 thousand compared to $96 thousand and $440 thousand recognized during the three and nine months ended June 30, 2021.

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7. Subsequent Events

Purchase Commitment

On July 19, 2022, the Company entered into an unconditional purchase commitment for services to support our hosting environment. At the time of the agreement, the Company had an obligation to $83 thousand of services during fiscal 2022, $500 thousand of services during fiscal 2023, $500 thousand of services during fiscal 2024, and $417 thousand of services in fiscal 2025.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Risks and Uncertainties

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including the following sections: “Management’s Discussion and Analysis,” and “Risk Factors.” These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors” (Part I, Item 1A of the Company’s Annual Report on Form 10-K for the Fiscal Year ended September 30, 2021 and Part II, Item 1A of this Form 10-Q), “Quantitative and Qualitative Disclosures about Market Risk” (Part I, Item 3 of this Form 10-Q and Part II, Item 7A of the Company’s Annual Report on Form 10-K for the Fiscal Year ended September 30, 2021), and “Management’s Discussion and Analysis” (Part I, Item 2 of this Form 10-Q). We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

Overview

Sonic Foundry, Inc. is the global leader for video capture, management, and streaming solutions as well as virtual and hybrid events. Trusted by thousands of educational institutions, corporations, health organizations and government entities in over 65 countries with solutions that transform communication, training, and learning. Sonic Foundry’s brands include Mediasite®, Mediasite Connect, Vidable™ and Global Learning Exchange™.

Impacts of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.  While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration, severity and impact of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as those of our key business partners, vendors and other counterparties for an indefinite period of time. The Company continues to follow guidelines outlined by the CDC and local county protocol. On August 2, 2021, the Company returned to in-person working. The Company implemented a hybrid module to allow employees to work 60% in office and 40% from home.

While COVID-19 has had negative impacts on our operations and the future impacts of the pandemic and any corresponding economic results are largely unknown and rapidly evolving. The Company has implemented new products and new approaches to deliver existing products to grow revenue.  In response to the cancellations of in-person events, the Company introduced a new virtual events platform as an alternate solution for our customers. The Company is confident the pandemic will accelerate the Company's new product strategy.

Restructuring and exit activities

The determination of when the Company accrues for involuntary termination benefits under restructuring plans depends on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement. The Company accounts for on-going benefit arrangements, such as those documented by employment agreements, in accordance with Accounting Standards Codification 712 ("ASC 712") Nonretirement Postemployment Benefits. Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations. When applicable, the Company records such costs into operating expense.

During the three and nine months ended June 30, 2022 the Company expensed involuntary termination benefits of $54 thousand and $73 thousand under ASC 420 compared to $56 and $157 thousand during the same periods last year.

Evolving Strategy on Growth Initiatives

While the Company continues to work at steadily improving results of its Mediasite business, we recognized growth constraints in our existing business, and, therefore, we are shifting our focus toward building our runway in adjacent markets for future growth strategies as follows:

	•	First, we are expanding our cloud capabilities to better support our customers’ video needs. This is an important step in moving Sonic Foundry from primarily a hardware provider to a SaaS service provider with recurring revenue streams.

	•	Second, we are building a library of AI -enabled video solutions that can deliver instant, comprehensive, and automated video enhancement at scale. We believe the market for this technology is compelling.

	•	The third key component of our growth strategy is aimed at democratizing global higher education. U.S. and U.K. universities are being increasingly challenged with lower enrollment and are looking for ways to expand into new growth markets. In close collaboration with several university clients, we have identified a global supply-demand imbalance. There are many students worldwide that can afford a higher education yet do not have access to it for a variety of reasons—geo/political instability; international travel restrictions; and inadequate infrastructure. Our innovative solution will allow students to have an in-person experience in locally supported, affordable, community-centric environments that offer aggregated educational content through our Mediasite platform. This is essentially master classes taught by top professors that encourage students to engage with one another in a collaborative and supported setting that bridges the educational gap and offers education opportunities in economically disadvantaged regions.

This year is the beginning of our transformation from focusing solely on our existing business to investing substantially, not only in our current space, but in these adjacent markets where we believe we can realize greater growth opportunities. While this strategy will take some time to fully realize, we have deals signed by key enterprise clients who are excited to bring these new ventures to market with us, and we intend to aggressively invest in this strategy.

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RESULTS OF OPERATIONS

Revenue

Revenue from our business includes the sale of Mediasite recorders and server software products and related services contracts, such as customer support, installation, customization services, training, content hosting and event services. We market our products to educational institutions, corporations and government agencies that need to deploy, manage, index and distribute video content on Internet-based networks. We reach both our domestic and international markets through reseller networks, a direct sales effort and partnerships with system integrators.

Q3-2022 compared to Q3-2021

Q3-2022 revenue of $6.5 million decreased 25% compared to Q3-2021 revenue of $8.7 million. Revenue consisted of the following:

	•	Product and other revenue from sale of Mediasite recorder units and server software Q3-2022 revenue of $2.2 million decreased $421 thousand or 16% compared to Q3-2021 revenue of $2.7 million and consistent with the decline in demand for hardware devices experienced over the last several years.

	•	Service 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, events and content hosting services. Service revenue decreased $1.8 million or 30% from $6.0 million in Q3-2021 to $4.2 million in Q3-2022, primarily from a reduction in the number and size of events as customers begin to go back to in person events, delays in renewals of support contracts, foreign currency impact on our Japanese and European operations, and a lower base of deferred revenue at the start of the quarter.

	•	At June 30, 2022, $8.7 million of revenue was deferred, of which we expect to recognize $7.5 million in the next twelve months, including approximately $3.4 million in the quarter ending September 30, 2022. At June 30, 2021, $9.8 million of revenue was deferred.

	•	Other revenue relates to freight charges billed separately to our customers.

YTD-2022 (nine months) compared to YTD-2021 (nine months)

Revenue for YTD-2022 totaled $21.0 million compared to YTD-2021 revenue of $26.5 million, a $5.6 million or 21% decrease. Revenue consisted of the following:

•

$6.4 million product and other revenue from the sale of recorders and software during YTD-2022 versus $7.4 million YTD-2021. The decrease reflects continued shift in demand from on-premise to cloud deployments causing a consistent decline in hardware devices.

•

$14.6 million revenue from services during YTD-2022 versus $19.1 million in YTD-2021. The $4.6 million or 24% decrease is primarily from a reduction in the number and size of events as customers begin to go back to in person events, delays in renewals of support contracts, foreign currency impact on our Japanese and European operations, and a lower base of deferred revenue at the start of the quarter.

Gross Margin

Q3-2022 compared to Q3-2021

Gross margin for Q3-2022 was $4.6 million or 71% of revenue compared to Q3-2021 gross margin of $6.0 million or 70%. The significant components of cost of revenue include:

•

Product costs. Product costs consist of costs associated with our Mediasite recorder hardware, freight, labor and certain allocated costs. These costs were $658 thousand in Q3-2022 and $1.1 million in Q3-2021, resulting in gross margin on products of 71% and 60%, respectively. The increase in margin is due to lower cost associated with the premium refresh revenue.

•

Services costs. Service costs consist of staff wages for tech support, hosting and events, operating costs for events and hosting, as well as depreciation expense for hosting infrastructure. These costs were $1.3 million in Q3-2022 and $1.5 million in Q3-2021, resulting in gross margin on services of 70% and 74% respectively.

YTD-2022 (nine months) compared to YTD-2021 (nine months)

Gross margin for YTD-2022 was $14.9 million or 71% of revenue compared to YTD-2021 gross margin of $18.9 million or 71%. The significant components of cost of revenue include:

•

Product costs. YTD-2022 product costs were $2.3 million compared to $2.8 million in YTD-2021, resulting in gross margin on products of 65% in YTD-2022 and 62% in YTD-2021. This increase in margin percentage is due to a shift away from hardware devices. The increase in margin is due to lower cost associated with the premium refresh revenue.

•

Service costs. YTD-2022 service costs were $3.8 million compared to $4.8 million in YTD-2021, resulting in gross margin on services of 74% in YTD-2022 and 75% in YTD-2021.

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Operating Expenses

Selling and Marketing Expenses

Selling and marketing expenses include wages and commissions for sales, marketing and business development personnel, print advertising and various promotional expenses for our products. Timing of these costs may vary greatly depending on introduction of new products and services or entrance into new markets, or participation in major tradeshows.

Q3-2022 compared to Q3-2021

Selling and marketing expenses were $2.9 million in Q3-2021 and consistent with $2.9 million in Q3-2022. Expenses in the major categories include:

•

In 2022, there was a $303 thousand expense related to launching Global Learning Exchange in the Bahamas including consulting cost, grand opening expense, and local partner operation fees. There was no such expense during 2021.

•

Mediasite Advertising & Tradeshows increased by $83 thousand as a result of reduced Covid restrictions on in person events.

•

Commissions and bonus accruals decreased $270 thousand as a result of reduced billings. Software and Software Maintenance Plans decreased $41 thousand.

•

Selling and marketing expenses for Sonic Foundry International and Mediasite KK accounted for $129 thousand and $716 thousand, respectively, an aggregate decrease of $170 thousand from Q3-2021.

YTD-2022 (nine months) compared to YTD-2021 (nine months)

Selling and marketing expenses increased $424 thousand or 5% from $8.8 million in YTD-2021 to $9.2 million in YTD-2022.

Differences in the major categories include:

•

In 2022, there was $510 thousand expense related to launching Global Learning Exchange in the Bahamas including consulting cost, grand opening expense, and local partner operation fees. There was no such expense during 2021.

•

Mediasite Advertising & Tradeshows increased $104 as a result of reduced Covid restrictions on in person events.

•

Commissions and bonus accruals decreased $270 thousand as a result of reduced billings.

•

Selling and marketing expenses for Sonic Foundry International and Mediasite KK accounted for $455 thousand and $2.5 million, respectively, an aggregate increase of $98 thousand from YTD-2021. The increase is primarily due to an increase in personnel costs.

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General and Administrative Expenses

General and administrative (“G&A”) expenses consist of personnel and related costs associated with the facilities, finance, legal, human resource and information technology departments, as well as other expenses not fully allocated to functional areas.

Q3-2022 compared to Q3-2021

G&A expenses increased $336 thousand or 30% from $1.1 million in Q3-2021 to $1.4 million in Q3-2022. Differences in the major categories include

•

Increase of $100 thousand due to increase in rent costs due to a $160 thousand rent credit in Q3-2021.

•

Professional services increased $85 thousand related to outside services and public company costs.

•

Increase of $81 thousand in supplies from $95 thousand to $176 thousand due to increased software costs.

•

G&A expenses for Sonic Foundry International and Mediasite KK accounted for $81 thousand and $176 thousand, respectively, an aggregate increase of $16 thousand from Q3-2021.

YTD-2022 (nine months) compared to YTD-2021 (nine months)

G&A expenses increased $1.1 million or 34% from $3.4 million in YTD-2021 to $4.5 million in YTD-2022. Differences in the major categories include:

•

Professional services increased $442 thousand due to increased outside services, compliance related cost, and investor relation.

•

Supplies increased from $218 thousand to $492 thousand due to increased software costs from increased headcount and new applications purchase.

•

G&A expenses for Sonic Foundry International and Mediasite KK accounted for $204 thousand and $653 thousand, respectively, an aggregate increase of $195 thousand from YTD-2021.

Product Development Expenses

Product development expenses include salaries and wages of the software research and development staff and an allocation of benefits, facility and administrative expenses.

Q3-2022 compared to Q3-2021

Product development expenses increased $41 thousand, or 2% from $1.9 million in Q3-2021 to $1.9 million in Q3-2022. Differences in the major categories include:

•

Increase of $158 thousand in supplies due to increased software costs from increased headcount and new applications purchase.

•

Product development expense for Sonic Foundry International and Mediasite KK accounted for $31 thousand and $67 thousand, respectively, an aggregate decrease of $117 thousand compared to Q3-2021.

YTD-2022 (nine months) compared to YTD-2021 (nine months)

Product development expenses increased by $262 thousand, or 5% from $5.4 million in YTD -2021 to $5.6 million in YTD -2022. Differences in the major categories include:

•

Increase of $324 thousand in supplies cost due to investment in software costs.

•

Increase of $23 thousand in travel & entertainment and meals due to reduced Covid restrictions.

•

Product development expense for Sonic Foundry International and Mediasite KK accounted for $191 thousand and $255 thousand, respectively, an aggregate decrease of $159 thousand compared to YTD-2021.

Other Income and Expense, Net

Interest expense for the three and nine months ended June 30, 2022 was $9 thousand and $22 thousand. Interest income for the three months ended June 30, 2021 was $10 thousand. Interest expense for the nine months ended June 30, 2021 was $42 thousand. The quarterly decrease over the prior year is a net effect of the PFG debt payoff and PPP Loan forgiveness. The Company recorded no amortization expense related to the back-end fee on the PFG loan for the three and nine months ended June 30, 2022 due to the debt being paid off in May 2021, compared to $6 thousand and $31 thousand for the same periods last year.

During the three and nine months ended June 30, 2022, a gain in fair value of $21 thousand and $51 thousand, was recorded related to the fair value remeasurement on the derivative liability associated with the Loan and Security Agreement and Warrant Debt with PFG compared to a gain in fair value of $22 thousand and $3 thousand during the three and nine months ended June 30, 2021. The fair value of the derivative liability is measured at fair value based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield.

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Foreign Currency

The Company's wholly-owned subsidiaries operate in Japan and the Netherlands, and utilize the Japanese Yen and Euro, respectively, as their functional currency. Assets and liabilities of the Company's foreign operations are translated in US dollars at period end exchange rates while revenues and expenses are translated using average rates for the period. Gains and losses from the translation are deferred and included in accumulated other comprehensive loss in the consolidated statements of operations.

For the three and nine months ended June 30, 2022, the Company's foreign currency translation adjustment was a loss of $133 thousand and $310 thousand, respectively, compared to a gain of $7 thousand and a loss $120 thousand, respectively, for the three and nine months ended June 30, 2021.

During the three and nine months ended June 30, 2022, the Company recorded an aggregate transaction loss of $1 thousand and $23 thousand, respectively, compared to an aggregate transaction gain of $2 thousand and $26 thousand for the three and nine months ended June 30, 2021. The aggregate transaction gain or loss is included in the other expense line of the condensed consolidated statements of operations.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are its cash from operations and debt and equity financing. During the first nine months of fiscal 2022, the Company had used $5.1 million cash for operating activities, compared with $797 thousand cash used by operating activities in the same period of fiscal 2021. The primary factors effecting the $5.1 million cash used by operating activities are the $4.4 million net loss YTD, $2.0 million change in unearned revenue, $634 thousand inventory purchase, $241 thousand change in prepaid and other current asset, and $400 thousand change in deferred taxes, partially offset by $2.3 million other operating activities including primarily $609 thousand stock-based compensation expenses, $861 thousand depreciation expenses, $124 thousand change in operating lease associated ROU asset, $128 thousand change in investment type lease, $410 thousand change in accounts payable, and $386 thousand in other long term assets.

Capital expenditures were $2.3 million in the first nine months of fiscal 2022 compared to $619 thousand in the same period in fiscal 2021. Capitalized software development costs were $1.7 million in the first nine months of fiscal 2022 compared to $0 in the same period in fiscal 2021.

The Company was provided $4.0 million of cash from financing activities during the first ninemonths of fiscal 2022. Payments on capital lease and financing arrangements of $64 thousand were offset by proceeds from stock option exercises of $107 thousand and common stock issuance of $4.0 million. For the same period in fiscal 2021, the Company used $776 thousand for financing activities primarily $935 thousand for debt payments partially offset by $247 from the exercise of stock options.

At June 30, 2022, the Company had $515 thousand outstanding, net of warrant debt and debt discounts, related to notes payable with PFG V and the Mediasite KK term debt.

At June 30, 2022, approximately $1.9 million of cash and cash equivalents was held by the Company’s foreign subsidiaries.

The Company believes its cash position plus available resources is adequate to accomplish its business plan through at least the next 12 months.

The Company completed a common stock issuance to certain investors totaling $3.5 million, net of $88 thousand expenses, on July 27, 2021. The proceeds of the stock issuance were intended to satisfy the initial listing requirements of the Nasdaq Capital Market. On April 19, 2022, the Company closed a public offering of common stock issuance of totaling $4.3 million, net of $406 thousand expenses. The proceeds of the stock issuance will be invested in the Company's new products, GLX and Vidable.

The Company will likely evaluate lease opportunities to finance equipment purchases in the future and support working capital needs. We likely will seek additional debt and equity financing but there are no assurances that these will be on terms acceptable to the Company.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from those reported in the Company’s Annual Report on Form 10-K for the year-ended September 30, 2021. At June 30, 2022, none of the Company’s $515 thousand in outstanding debt is variable rate, therefore, an increase in the level of interest rates would not have any material impact on our Consolidated Financial Statements. We monitor our positions with, and the credit quality of, the financial institutions that are party to any of our financial transactions.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on evaluations at June 30, 2022, our principal executive officer and principal financial officer, with the participation of our management team, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act). Disclosure controls and procedures ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that material information relating to the Company is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Controls

During the period covered by the quarterly report on Form 10-Q, the Company has not made any changes to its internal control over financial reporting (as referred to in Paragraph 4(b) of the Certifications of the Company's principal executive officer and principal financial officer included as exhibits to the report) that have materially affected, or are reasonably likely to affect the Company's internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Form 10-K for the fiscal year ended September 30, 2021 filed with the SEC.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 6. EXHIBITS

NUMBER		DESCRIPTION
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		Articles Supplementary to the Company Charter of the Registrant, as relates to Series A Preferred Stock, dated May 30, 2017, filed as Exhibit 5.03 to the 8-K filed on June 5, 2017, and hereby incorporated by reference.

3.3		Articles Supplementary to the Company Charter of the Registrant, as relates to Series A Preferred Stock, dated November 6, 2017, filed as Exhibit 3.1 to the Form 8-K filed on November 21, 2017, and hereby incorporated by reference.

3.4		Amended and Restated By-Laws of the Registrant, filed as Exhibit No. 3.1 to the Form 8-K filed on January 25, 2018, and hereby incorporated by reference.

3.5		Articles Supplementary to the Company Charter of the Registrant, as relates to Series A Preferred Stock, filed as Exhibit 3.1 to the Form 8-K filed on May 23, 2018, and hereby incorporated by reference.

3.6		Article of Amendment to the Company Charter of the Registrant, filed as Exhibit 3.6 to Form 10-Q on August 12, 2021, and hereby incorporated by reference.

3.7		Article of Amendment to the Company Charter of the Registrant, filed as Exhibit 3.1 to the Form 8-K filed on February 25, 2022, and hereby incorporated by reference.

4.1		Form of Warrant Agreement between registrant and four investors, dated July 20, 2021, filed as Exhibit 4.1 to the 8-K, filed on July 30, 2021 and here by incorporated by reference.

10.1*		Registrant’s 2008 Non-Employee Directors’ Stock Option Plan, as amended, filed as Exhibit 3 to the Form 14A filed on January 26, 2017, and hereby incorporated by reference.

10.2*		Registrant’s 2008 Employee Stock Purchase Plan, as amended, filed as Exhibit 1 to the Form 14A filed on January 26, 2017, and hereby incorporated by reference.

10.3*		Registrant’s 2009 Stock Incentive Plan, as amended, filed as Exhibit 2 to the Form 14A filed on January 26, 2017, and hereby incorporated by reference.

10.4		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.

10.5		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.

10.6		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.

10.7		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.


10.8		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.

10.9		Warrant, dated April 16, 2018, filed as Exhibit 10.2 to the Form 8-K filed on April 16, 2018, and hereby incorporated by reference.

10.10		Warrant, dated as of May 11, 2018, between Registrant and Partners for Growth V, L.P., filed as Exhibit 10.42 to the Form 10-Q filed on May 15, 2018, and hereby incorporated by reference.

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10.11		Lease Agreement between Mediasite KK, as tenant, and Maida Housing Corporation, as landlord, dated April 1, 2014, filed with the March 31, 2020 Form 10-Q and hereby incorporated by reference.

10.12		Lease Agreement between Mediasite KK, as tenant, and XYMAX Corporation, as landlord, dated April 7,2021, and hereby incorporated by reference

10.13*		Employment Agreement dated October 20, 2020 between Sonic Foundry, Inc. and Joseph Mozden, Jr., filed as Exhibit 10.1 to the Form 8-K filed on October 22, 2020, and hereby incorporated by reference.

10.14*		Engagement Letter dated as of February 25, 2021 by and between Sonic Foundry, Inc. and Kenneth Minor, filed as Exhibit 10.1 to the Form 8-K filed on March 1, 2021, and hereby incorporated by reference.

10.15		Form of Registration Right Agreement between Registrant and four investor, dated July 20, 2021, filed as Exhibit 10.1 to the Form 8-K filed on July 30, 2021, and hereby incorporated by reference.

10.16		Revolving Credit Agreement, dated July 28, 2021, between Registrant and U.S. Bank National Association, filed as Exhibit 10.1 to the Form 8-K filed on August 3, 2021, and hereby incorporated by reference.

10.17		Lease Agreement between Registrant, as tenant, and West Washington Associates, LLC as landlord, dated June 15, 2021, filed as Exhibit 10.49 to Form 10-Q on August 12, 2021, and hereby invorporated by reference.

10.18		Amendment to Revolving Credit Agreement, dated March 30, 2022, between Registrant and U.S. Bank National Association, filed as Exhibit 10.1 to the Form 8-K filed on April 4, 2022, and hereby incorporated by reference

10.19		Underwriting Agreement, dated as of April 13, 2022, between Sonic Foundry, Inc. and Maxim Group LLC, filed as Exhibit 1.1 to the Form 8-K filed on April 15, 2022, and hereby incorporated by reference

10.20		Lease Agreement between Sonic Foundry International, as tenant, and Prinsen Geerlings, as landlord, dated January 21, 2022, a nd hereby incorporated by reference.

31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32		Section 906 Certification of Chief Executive Officer and Chief Financial Officer

101		The following materials from the Sonic Foundry, Inc. Form 10-Q for the quarter ended June 30, 2022 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statement of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Stockholders' Deficit, (v) the Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

Registrant will furnish upon request to the Securities and Exchange Commission a copy of all exhibits, annexes and schedules attached to each contract referenced in item 10.

*	Compensatory Plan or Arrangement

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SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Sonic Foundry, Inc.

(Registrant

August 11, 2022	By:	/s/ Joe Mozden, Jr.
		Joe Mozden, Jr.
		Chief Executive Officer

August 11, 2022	By:	/s/ Kenneth A. Minor
		Kenneth A. Minor
		Chief Financial Officer

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company