0001029744-19-000103.txt : 20190813 0001029744-19-000103.hdr.sgml : 20190813 20190813160756 ACCESSION NUMBER: 0001029744-19-000103 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190630 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190813 DATE AS OF CHANGE: 20190813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SONIC FOUNDRY INC CENTRAL INDEX KEY: 0001029744 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 391783372 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30407 FILM NUMBER: 191020687 BUSINESS ADDRESS: STREET 1: 222 W. WASHINGTON AVENUE CITY: MADISON STATE: WI ZIP: 53703 BUSINESS PHONE: 6084431600 MAIL ADDRESS: STREET 1: 222 W. WASHINGTON AVENUE CITY: MADISON STATE: WI ZIP: 53703 8-K 1 a6-30x191.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

August 13, 2019 (June 30, 2019)
Date of Report (Date of earliest event reported)
 
Sonic Foundry, Inc.
(Exact name of registrant as specified in its charter)
 
Maryland
(State or other jurisdiction
of incorporation)
 
000-30407
(Commission
File Number)
 
39-1783372
(IRS Employer
Identification No.)

222 W. Washington Ave
Madison, WI 53703
(Address of principal executive offices)
(608) 443-1600
(Registrant's telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨

 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
¨
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
¨
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
¨
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

Item 2.02 Results of Operations and Financial Condition.

On August 13, 2019, Sonic Foundry, Inc. reported financial results for the fiscal quarter ended June 30, 2019. See attached press release at exhibit 99.1.
The information in this Report on Form 8-K (including the exhibit) is furnished and shall not be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.

(a)
Exhibits

99.1
Press release concerning financial results for the fiscal quarter ended June 30, 2019.
 
 
 




EXHIBIT LIST
 

NUMBER DESCRIPTION



SIGNATURE
 
Pursuant to the requirements 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 13, 2019        
 
 
 
By:
 
/s/ Kenneth A. Minor
By:
 
Kenneth A. Minor
Title:
 
Chief Financial Officer
 
 
 



 EX-99.1 2 sofo6-30x19earningsrelease1.htm EXHIBIT 99.1 Exhibit


Sonic Foundry Announces Fiscal 2019 Third Quarter Financial Results

MADISON, Wis. - August 13, 2019 - Sonic Foundry (OTC Pink Sheets: SOFO), today announced consolidated financial results for its fiscal 2019 third quarter ended June 30, 2019.

Fiscal 2019 Third Quarter Highlights
•
Total revenues were $10.1 million ($10.2 million without distribution impact) compared to $8.7 million in the third quarter of 2018
•
Gross margin was $7.4 million or 73 percent of sales compared to $6.4 million, or 74 percent of sales in the third quarter of 2018
•
Adjusted EBITDA of $740,000, compared to $(343,000) in the third quarter of 2018
•
Net loss of $(159,000) ($(93,000) without distribution impact), or $(0.03) per share compared to net loss of $(1) million, or $(0.23) per share in the third quarter of 2018
•
Billings totaled $10.5 million in the third quarter of 2019, an increase of 16 percent compared to the same period last year
•
Unearned revenue increased to $11 million as of June 30, 2019

Fiscal 2019 Third Quarter Review
Service billings, including support, hosting, events, and installs, saw an increase of 14 percent from the prior year for a total of $6.5 million. Product billings were up 20 percent to $4 million during the third quarter of fiscal year 2019 compared to the same period last year. Product billings and revenue were negatively impacted by a planned reduction of product inventory maintained by domestic distributors of $94,000 during the quarter and $1.3 million year to date. The company expects to recognize $3.4 million of the current unearned revenue in the fourth quarter of fiscal 2019.

Recurring revenue of $6.3 million was 63 percent of total revenue in the third quarter of 2019, compared to $5.9 million, or 68 percent of total revenue in the third quarter of 2018.

Operating expenses were $7.2 million, down $66,000 or 1 percent from the same period in 2018. The net loss of $(159,000) was an improvement compared to the same period in 2018.

“I am pleased to see us execute according to our plan for the quarter. As we proceed with our strategic and operational improvements, we are focused on living up to the expectations and goals we create,” said Michael Norregaard, CEO, Sonic Foundry. “We are confident we have the platform that best helps our customers scale deployments across campuses and enterprises. As we quickly approach the start of a new fiscal year, Mediasite Video Cloud and our unified communications solution Mediasite Join are two of our key priorities. We are zeroing in on our product innovation process and customer success, adding product functions and services to attract and expand more customers.”  

Non-GAAP Financial Information
To supplement and enhance the reader’s understanding of our operating performance and our ability to satisfy lender requirements, we disclose adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (adjusted EBITDA), a non-GAAP measure of operating performance. Our adjusted EBITDA measure additionally adds back stock compensation expense and severance expense from the SEC definition of EBITDA. As such, our adjusted EBITDA may not be comparable to similarly titled measures reported by other companies, and should not be viewed as an alternative to net income as a measurement of our operating performance. Our credit agreement contains a minimum EBITDA calculation based, in part, on adjusted EBITDA since this measure is representative of adjusted income available for debt and interest payments. A reconciliation of net income (loss) to adjusted EBITDA for the quarters ended June 30, 2019 and 2018 are included in the release.

About Sonic Foundry®, Inc.
Sonic Foundry (OTC Pink Sheets: SOFO) is the global leader for video capture, management and streaming solutions. Trusted by more than 4,900 educational institutions, corporations, health organizations and government entities in over 65 countries, its Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming videos. Learn more at www.sonicfoundry.com and @mediasite.

© 2019 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.

Forward Looking Statements
This news release contains forward-looking statements about the products and services of Sonic Foundry within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward looking statements




include statements about our products and services, our customer base, strategic investments, new partnerships, our future operating results and any statements we make about the company’s future.  These types of statements address matters that are subject to many risks and uncertainties. Actual results could differ materially from the forward-looking guidance we provide.  Any forward-looking statements should be considered in context of the risk factors disclosed in our periodic forms 10Q, 10K and other filings with the SEC.  These filings can be accessed on-line at www.sec.gov and other websites or can be obtained from the company’s investor relations department.  All of the information and disclosures we make in this news release regarding our business, including any forward looking guidance, are as of the date given and we assume no obligation to update or change this information, regardless of subsequent events.


Media Relations:
Nicole Wise, Director of Communications
920.226.0269










Sonic Foundry, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)
 
 
June 30,
2019
 
September 30,
2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
3,387

 
$
1,189

Accounts receivable, net of allowances of $75 and $524
6,890

 
7,418

Financing receivables, current, net of allowances of $526, respectively
109

 
100

Inventories
955

 
1,027

Investment in sales-type lease, current
163

 
150

Capitalized commissions, current
435

 
—

Prepaid expenses and other current assets
829

 
941

Total current assets
12,768

 
10,825

Property and equipment:
 
 
 
Leasehold improvements
1,122

 
1,105

Computer equipment
6,015

 
5,718

Furniture and fixtures
1,242

 
1,099

Total property and equipment
8,379

 
7,922

Less accumulated depreciation and amortization
6,782

 
6,009

Property and equipment, net
1,597

 
1,913

Other assets:
 
 
 
Financing receivables, long-term
97

 
181

Investment in sales-type lease, long-term
134

 
249

Capitalized commissions, long-term
120

 
—

Other long-term assets
400

 
415

Total assets
$
15,116

 
$
13,583

Liabilities and stockholders’ deficit
 
 
 
Current liabilities:
 
 
 
Revolving lines of credit
$
463

 
$
885

Accounts payable
1,283

 
1,610

Accrued liabilities
1,724

 
1,609

Unearned revenue
8,887

 
11,645

Current portion of capital lease and financing arrangements
169

 
248

Current portion of notes payable and warrant debt, net of discounts
768

 
593

Total current liabilities
13,294

 
16,590

Long-term portion of unearned revenue
2,152

 
1,691

Long-term portion of capital lease and financing arrangements
96

 
187

Long-term portion of notes payable and warrant debt, net of discounts
5,483

 
1,357

Derivative liability, at fair value
5

 
14

Other liabilities
165

 
202

Total liabilities
21,195

 
20,041

Commitments and contingencies
 
 
 
Stockholders’ deficit:
 
 
 
Preferred stock, $.01 par value, authorized 500,000 shares; none issued
—

 
—

9% Preferred stock, Series A, voting, cumulative, convertible, $.01 par value (liquidation preference of $1,000 per share), authorized 4,500 shares; zero and 2,678 shares issued and outstanding, respectively, at amounts paid in
—

 
1,651

5% Preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued
—

 
—

Common stock, $.01 par value, authorized 10,000,000 shares; 6,735,512 and 5,113,400 shares issued and 6,722,796 and 5,100,684 shares outstanding
67

 
51

Additional paid-in capital
203,752

 
200,130

Accumulated deficit
(209,161
)
 
(207,419
)
Accumulated other comprehensive loss
(542
)
 
(676
)
Receivable for common stock issued
(26
)
 
(26
)




Treasury stock, at cost, 12,716 shares
(169
)
 
(169
)
Total stockholders’ deficit
(6,079
)
 
(6,458
)
Total liabilities and stockholders’ deficit
$
15,116

 
$
13,583







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,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Product and other
$
4,221

 
$
3,214

 
7,768

 
$
8,927

Services
5,847

 
5,485

 
17,799

 
17,127

Total revenue
10,068

 
8,699

 
25,567

 
26,054

Cost of revenue:
 
 
 
 
 
 
 
Product and other
1,558

 
1,388

 
2,854

 
3,814

Services
1,123

 
916

 
3,673

 
3,446

Total cost of revenue
2,681

 
2,304

 
6,527

 
7,260

Gross margin
7,387

 
6,395

 
19,040

 
18,794

Operating expenses:
 
 
 
 
 
 
 
Selling and marketing
3,785

 
3,882

 
11,564

 
11,859

General and administrative
1,609

 
1,631

 
4,492

 
4,713

Product development
1,849

 
1,796

 
5,617

 
5,361

Total operating expenses
7,243

 
7,309

 
21,673

 
21,933

Income (loss) from operations
144

 
(914
)
 
(2,633
)
 
(3,139
)
Non-operating income (expenses):
 
 
 
 
 
 
 
Interest expense, net
(276
)
 
(266
)
 
(657
)
 
(461
)
Other income (expense), net
(63
)
 
88

 
(66
)
 
98

Total non-operating expenses
(339
)
 
(178
)
 
(723
)
 
(363
)
Loss before income taxes
(195
)
 
(1,092
)
 
(3,356
)
 
(3,502
)
Benefit (provision) for income taxes
36

 
72

 
(77
)
 
1,353

Net loss
(159
)
 
(1,020
)
 
(3,433
)
 
(2,149
)
Dividends on preferred stock
(24
)
 
(67
)
 
(122
)
 
(189
)
Net loss attributable to common stockholders
$
(183
)
 
$
(1,087
)
 
$
(3,555
)
 
$
(2,338
)
Loss per common share
 
 
 
 
 
 
 
– basic
$
(0.03
)
 
$
(0.23
)
 
$
(0.64
)
 
$
(0.51
)
– diluted
$
(0.03
)
 
$
(0.23
)
 
$
(0.64
)
 
$
(0.51
)
Weighted average common shares
 
 
 
 
 
 
 
– basic
6,122,098

 
4,709,516

 
5,528,999

 
4,542,955

– diluted
6,122,098

 
4,709,516

 
5,528,999

 
4,542,955


















Sonic Foundry, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Nine Months Ended June 30,
 
2019
 
2018
Operating activities
 
 
 
Net loss
$
(3,433
)
 
$
(2,149
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Amortization
170

 
482

Depreciation and amortization of property and equipment
748

 
822

Loss on sale of fixed assets
8

 
—

Provision for doubtful accounts - including financing receivables
31

 
300

Deferred taxes
—

 
(1,387
)
Stock-based compensation expense related to stock options and warrants
203

 
392

Stock issued for board of director's fees
246

 
—

Conversion of accrued interest to preferred stock
—

 
31

Beneficial conversion feature recognized on debt converted to preferred stock
—

 
71

Remeasurement gain on derivative liability
(12
)
 
(16
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
660

 
834

Financing receivables
87

 
1,614

Inventories
75

 
70

Capitalized commissions
138

 
—

Prepaid expenses and other current assets
280

 
356

Accounts payable and accrued liabilities
(294
)
 
(126
)
Other long-term liabilities
(46
)
 
(136
)
Unearned revenue
(1,339
)
 
(2,347
)
Net cash used in operating activities
(2,478
)
 
(1,189
)
Investing activities
 
 
 
Purchases of property and equipment
(373
)
 
(657
)
Net cash used in investing activities
(373
)
 
(657
)
Financing activities
 
 
 
Proceeds from notes payable
5,500

 
3,000

Proceeds from revolving lines of credit
9,199

 
16,706

Payments on notes payable
(583
)
 
(815
)
Payments to settle warrant debt
—

 
(200
)
Payments on revolving lines of credit
(9,636
)
 
(16,546
)
Payment of debt issuance costs
(110
)
 
(97
)
Proceeds from issuance of preferred stock, common stock and warrants
864

 
1,008

Payments on capital lease and financing arrangements
(193
)
 
(228
)
Net cash provided by financing activities
5,041

 
2,828

Changes in cash and cash equivalents due to changes in foreign currency
8

 
(64
)
Net increase in cash and cash equivalents
2,198

 
918

Cash and cash equivalents at beginning of year
1,189

 
1,211

Cash and cash equivalents at end of year
$
3,387

 
$
2,129

Supplemental cash flow information:
 
 
 
Interest paid
$
425

 
$
290





Income taxes paid, foreign
237

 
48

Non-cash financing and investing activities:
 
 
 
Property and equipment financed by capital lease or accounts payable
45

 
414

Debt discount and warrant
679

 
127

Deemed dividend for beneficial conversion feature of preferred stock
—

 
28

Preferred stock dividends paid in additional shares
122

 
161

Subordinated note payable converted to preferred stock
—

 
1,000

Conversion of preferred shares to common shares
1,772

 
—






Sonic Foundry, Inc.
Condensed Consolidated Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)
(Unaudited)
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Net loss
$
(159
)
 
$
(1,020
)
 
$
(3,433
)
 
$
(2,149
)
Add:
 
 
 
 
 
 
 
   Depreciation and amortization
240

 
411

 
748

 
1,161

   Income tax benefit (provision)
(36
)
 
(72
)
 
77

 
(1,353
)
   Interest expense
276

 
266

 
657

 
462

   Stock-based compensation expense
(17
)
 
72

 
203

 
392

   Severance expense
436

 
—

 
562

 
—

Adjusted EBITDA
$
740

 
$
(343
)
 
$
(1,186
)
 
$
(1,487
)