Sonic Foundry, Inc. Announces Listing Transfer from The Nasdaq Global Market to The Nasdaq Capital Market

MADISON, Wis. - September 15, 2008 - Sonic Foundry, Inc. (NASDAQ: SOFO), the recognized market leader for rich media webcasting and knowledge management, today announced that on September 12, 2008, it received a letter from the Nasdaq Listings Qualifications Staff (the "Staff") stating that it has approved the Company's request to transfer the listing of its shares from The Nasdaq Global Market to The Nasdaq Capital Market, effective at the open of the market on Tuesday, September 16, 2008. The Nasdaq Capital Market is one of the three market tier designations for Nasdaq-listed stock, and presently includes over 500 companies. The Nasdaq Capital Market operates in substantially the same manner as The Nasdaq Global Market. Securities listed on The Nasdaq Capital Market satisfy all applicable qualification requirements for Nasdaq securities and all companies listed on The Nasdaq Capital Market must meet certain financial requirements and adhere to Nasdaq's corporate governance standards. Sonic Foundry stock will continue to trade under the symbol "SOFO".

As previously announced, the Company received notice from the Staff on March 10, 2008, that the Company did not meet the minimum bid price of $1.00 per share, in accordance with Marketplace Rule 4450(a)(5) (the "Rule") which is required for listing on The Nasdaq Global Market. On September 9, 2008 the Company was notified by the Staff that it had not regained compliance with the Rule during the 180 calendar days provided and that its securities are therefore subject to delisting from The Nasdaq Global Market. The transfer to The Nasdaq Capital Market extends the requirement to achieve a minimum $1.00 bid price for at least 10 consecutive business days until March 9, 2009.

In response to Nasdaq's notification, the Company intends to continue to carefully monitor its stock price and consider all options to regain compliance.