Acquisition of MediaMission Holding B.V.

3 Months Ended

Dec. 31, 2013

Acquisition of MediaMission Holding B.V.

6. Acquisition of MediaMission Holding B.V.

On December 16, 2013, Sonic Foundry completed its acquisition of all of the outstanding stock of MediaMission Holding B.V. (“MediaMission”) in the Netherlands. Sonic Foundry paid $1.493 million for all the outstanding stock in MediaMission, comprised of $458,000 cash, $687,000 subordinated note payable over three years (interest rate of 6.5%) and $348,000 in shares of Sonic Foundry stock. The stock portion of the purchase price consisted of 37,608 shares of Sonic Foundry common stock. In connection with the acquisition of MediaMission, the Company entered into employment agreements with the two managing principals of MediaMission.

The Company recorded the acquired tangible and intangible assets and liabilities assumed based on their estimated fair values. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes may be significant. The Company may realize book to tax basis differences when the valuation of assets is complete and thus record deferred tax assets or liabilities in connection with the purchase price allocation. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

The preliminary acquisition date fair values of the assets acquired and liabilities assumed are as follows (in thousands):

	Estimated
	Fair Value
Assets acquired:
Cash	$	339
Other current assets		923
Property and equipment		49
Acquired goodwill and other intangible assets		1,293
Total assets acquired		2,604
Liabilities assumed:
Current liabilities		(1,111	)
Total purchase price	$	1,493

MediaMission contributed revenue of approximately $90 thousand and net income of approximately $43 thousand for the period from the date of acquisition to December 31, 2013. The Company determined that the acquisition was not deemed to be a material business combination and it is impractical to include such pro forma information given the difficulty in obtaining the historical financial information of MediaMission and the provisional nature of purchase accounting. Inclusion of such information would require the Company to make estimates and assumptions regarding MediaMission’s historical financial results that we believe may ultimately prove inaccurate and may be misleading.