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Sonic Foundry Reports Record Revenues for Second Quarter and Six Months Ending March 31, 2000
Sonic Foundry, Inc. (Nasdaq: SOFO), the leading developer and marketer of digital media and Internet software tools, services, and systems, today announced its financial results for the fiscal second quarter and six months ending March 31, 2000.
Revenues grew 114% to a record $6.0 million during the quarter, compared with $2.8 million reported for the same period last year. The Company also reported that revenues totaled $11.1 million for the six months ended March 31, 2000, also a record for the Company, an increase of approximately 102%, versus total revenue of $5.5 million for the comparative six month period ended March 31, 1999. The record increase in revenues achieved during both the most recently concluded quarter and six month periods were attributed to the sale of the Company's consumer line of ACID[TM] and SIREN[TM] Jukebox software products. Additional growth was fueled by the Company's online and catalog initiatives, contributions from Sonic Foundry Media Services[TM], and transactions with OEM partners.
The Company posted a net loss for the second quarter, 2000, of $2.5 million, or $0.15 per share, compared with a net loss of $1.5 million, or $0.28 per share, for the comparable period last year. The Company reported a net loss of $4.7 million or $0.31 for the six months ended March 31, 2000, versus a net loss of $2.9 million or $0.54 for the comparative six month period ended March 31, 1999. The net loss per share for both the quarter and six month periods ended March 31, 2000, are adjusted to reflect the Company's recent 2 for 1 stock split. The net losses incurred during both the quarterly and six month periods ended March 31, 2000, was the result of an increase in expenses related to investments in research and development, advertising, infrastructure for Sonic Foundry Media Services, and expenses associated with the Company's direct mail and catalog efforts.
"Our record growth is attributed to the outstanding strength of our award-winning software product lines including ACID, Vegas[TM], and SIREN Jukebox and our new e-commerce and catalog initiatives," commented Rimas Buinevicius, Sonic Foundry's chairman and chief executive officer. "In addition, we experienced initial revenues from Sonic Foundry Media Services, an area where we continue to offer new and innovative media solutions for the major players in the streaming media space."
Recent Highlights
Acquisitions
Jedor, Inc. was purchased in January, bringing image and animation technology to Sonic Foundry's arsenal of media production software tools.
STV Streaming Media was acquired in April for $66 million in a stock for stock transaction. This powerful combination allows Sonic Foundry to be a single source Internet media solutions company, offering software, encoding, syndication, webcasting, and consulting services.
Key Customers
Sonic Foundry Media Services inked deals with several key customers including Sony Pictures Digital Entertainment, Warner Bros. Online and Entertaindom.com, Columbia TriStar Interactive, BMG Entertainment, Navarre Corporation, Handleman, Streamsearch.com, and Launch.com.
Stock Split
The Company announced a 2 for 1 stock split for Shareholders of record on April 7. The announcement was made at its annual shareholder meeting on March 24.
New Product Launch
Sonic Foundry announced the launch of Viscosity[TM], a 2D web animation creation software product that fuses the process of image editing and animation.
ACID at Oscars
Sonic Foundry's ACID[TM] PRO 2.0 music creation software was used to create the musical underscore for the 2000 Oscar nomination announcements during the 2000 Oscar telecast. The 2000 Oscar ceremony is the first to use this technology-based musical platform in place of a traditional orchestra.
Dilbert On Demand
Sonic Foundry Media Services provided the encoding for Columbia TriStar Interactive's "Dilbert on Demand" webcast. This allowed viewers to view the Dilbert cartoon and see never-seen-before Dilbert outtakes via the Web.
Private Financing
Sonic Foundry completed two private equity financings totaling $42.5 million in cash and marketing consideration primarily to support further expansion of Sonic Foundry Media Services.
Warrant Redemption
The Company exercised the redemption provision of its common stock purchase warrants in the second quarter, resulting in $12 million in gross proceeds.
Sonic Foundry, Inc.
Consolidated Balance Sheets
March 31, September 30,
2000 1999
Assets (Unaudited)
Current assets:
Cash and cash equivalents $45,407,721 $5,889,107
Accounts receivable, net of
allowances of $1,285,894 and
$1,314,750 at March 31, 2000
and September 30, 1999, respectively 6,128,482 3,703,517
Accounts receivable - other 116,819 57,203
Revenues in excess of billings 180,000 -
Inventories 1,180,652 1,040,927
Prepaid expenses and
other current assets 1,687,348 880,123
Prepaid advertising 2,500,000 -
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Total current assets 57,201,022 11,570,877
Property and equipment:
Land 95,000 190,000
Buildings and improvements 1,661,847 1,737,962
Equipment 5,070,361 2,218,113
Furniture and fixtures 271,512 202,187
----------- ----------
Total property and equipment 7,098,720 4,348,262
Less accumulated depreciation 1,388,562 923,051
----------- ----------
Net property and equipment 5,710,158 3,425,211
Other assets:
Notes receivable - affiliates 2,000,000 -
Capitalized software development costs,
net 798,732 643,220
Long term investment 513,787 513,787
Other assets 680,013 556,165
----------- ----------
Total other assets 3,992,532 1,713,172
----------- ----------
Total assets $66,903,712 $16,709,260
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Sonic Foundry, Inc.
Consolidated Balance Sheets
March 31, September 30,
2000 1999
(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,307,591 $1,866,821
Accrued liabilities 1,057,375 812,401
Current portion of long-term liabilities 154,927 48,569
----------- ----------
Total current liabilities 3,519,893 2,727,791
Long-term liabilities:
Long-term liabilities, net of
current portion 742,336 653,800
Subordinated debt - 4,580,725
----------- ----------
Total long-term liabilities 742,336 5,234,525
Stockholders' equity:
Preferred Stock, $.01 par value,
authorized 5,000,000 shares; none - -
issued and outstanding
5% preferred stock, Series B, voting,
cumulative, convertible, $.01 - -
par value (liquidation preference at
par), authorized 10,000,000
shares, none issued and outstanding
Common stock, $.01 par value, authorized
100,000,000 shares; 193,619 129,945
19,361,886 and 12,994,498 shares
issued and outstanding at March
31, 2000 and September 30, 1999
Common stock warrants and options 1,194,607 1,011,375
Additional paid-in capital 76,403,494 15,271,280
Subscriptions receivable (2,860,000) -
Accumulated deficit (12,140,235) (7,465,656)
Unearned compensation (150,002) (200,000)
----------- ----------
Total stockholders' equity 62,641,483 8,746,944
----------- ----------
Total liabilities and stockholders' equity $66,903,712 $16,709,260
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Financial statements reflect adjustment for 2-for-1 stock split
Sonic Foundry, Inc.
Consolidated Statements of Operations
Three Months Ended
March 31,
1999 2000
Revenue:
Software license fees $ 2,760,722 $5,661,335
Media services -- 366,962
----------- ----------
Total Revenue 2,760,722 6,028,297
Cost of revenue:
Cost of software license fees 701,208 1,165,864
Cost of media services -- 370,109
----------- ----------
Total cost of revenue 701,208 1,535,973
----------- ----------
Gross margin 2,059,514 4,492,324
Operating expenses:
Selling and marketing expenses 1,970,404 4,055,557
General and administrative
expenses 987,015 1,705,634
Product development expenses 657,888 1,521,988
----------- ----------
Total operating expenses 3,615,307 7,283,179
----------- ----------
Loss from operations (1,555,793) (2,790,855)
Other income (expense):
Interest expense (2,362) (58,928)
Interest and other income 51,321 378,656
----------- ----------
Total other income 48,959 319,728
----------- ----------
Loss before income taxes (1,506,834) (2,471,127)
Income tax expense -- --
----------- ----------
Net loss $(1,506,834) $(2,471,127)
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Loss per common share -
Basic and diluted $ (0.28) $ (0.15)
=========== ===========
Six Months Ended
March 31,
1999 2000
Revenue:
Software license fees $ 5,516,289 $10,728,683
Media services -- 403,166
----------- ----------
Total Revenue 5,516,289 11,131,849
Cost of revenue:
Cost of software license fees 1,521,630 2,220,505
Cost of media services -- 473,503
----------- ----------
Total cost of revenue 1,521,630 2,694,008
----------- ----------
Gross margin 3,994,659 8,437,841
Operating expenses:
Selling and marketing expenses 4,042,795 8,111,540
General and administrative
expenses 1,761,911 3,157,866
Product development expenses 1,215,522 2,712,488
----------- ----------
Total operating expenses 7,020,228 13,981,894
----------- ----------
Loss from operations (3,025,569) (5,544,053)
Other income (expense):
Interest expense (5,957) (225,394)
Interest and other income 142,902 1,094,868
----------- ----------
Total other income 136,945 869,474
----------- ----------
Loss before income taxes (2,888,624) (4,674,579)
Income tax expense -- --
----------- ----------
Net loss $(2,888,624) $(4,674,579)
=========== ==========
Loss per common share -
Basic and diluted $ (0.54) $ (0.31)
=========== ========== About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the trusted market leader for enterprise webcasting solutions, providing video content management and distribution for education, business and government. Powered by the patented Mediasite webcasting platform and webcast services of Mediasite Events, the company empowers people to advance how they share knowledge online, using video webcasts to bridge time and distance, enhance learning outcomes and improve performance.