Sonic Foundry Raises $3.2 Million in Private Placement

Sonic Foundry[R] Inc. (NASDAQ: SOFO), a leading provider of rich media software, systems and services announced today that it has completed a $3.2 million offering of convertible subordinated debt with certain investors, including one institutional holder.

The debt carries interest at 10% per annum and is convertible into shares of common stock at a fixed rate of $2.45, subject to certain anti dilution adjustments. The investors also received warrants to purchase 528,000 shares of common stock with a strike price of $2.94 per share.

Rimas Buinevicius, Chairman and CEO, said, "We were able to complete this transaction during one of the most difficult financial markets in recent memory. We believe this financing is a powerful demonstration of the investment community's confidence in Sonic Foundry's opportunity to revolutionize the rich media industry."

Buinevicius continued, "Our recent acquisition of MediaSite, an industry leader in advanced indexing and multi-modal analysis technologies, coupled with existing technology and service capabilities, enable the combined entity to address the complete needs of organizations requiring cost effective and reliable rich media processing needs. Completion of this financing round offsets the cash used in acquiring MediaSite, while providing the company with flexibility to manage and grow our new service and system opportunities in the entertainment, government, corporate and education markets."