10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-30407

SONIC FOUNDRY, INC.

(Exact name of registrant as specified in its charter)

Maryland	39-1783372
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

222 West Washington Ave, Madison, WI 53703

(Address of principal executive offices)

(608) 443-1600

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days

Yes  ☒           No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒            No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

        Yes  ☐    No   ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐            No  ☒

State the number of shares outstanding of each of the issuer’s common equity as of the last practicable date:

Class	Outstanding July 31, 2021
Common Stock, $0.01 par value	9,033,277

PART I. FINANCIAL INFORMATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. For a more complete discussion of accounting policies and certain other information, refer to the Company’s annual report filed on Form 10-K for the fiscal year ended September 30, 2020

2

TABLE OF CONTENTS

		PAGE NO.
PART I	FINANCIAL INFORMATION	2
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets – June 30, 2021 and September 30, 2020	4
	Condensed Consolidated Statements of Operations – Three and nine months ended June 30, 2021 and 2020	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and nine months ended June 30, 2021 and 2020	6
	Condensed Consolidated Statements of Stockholders' Equity (Deficit) - Three and nine months ended June 30, 2021 and 2020	7
	Condensed Consolidated Statements of Cash Flows – Nine months ended June 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 6.	Exhibits	32
Signatures		35

3

Item 1

Sonic Foundry, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

(Unaudited)

	June 30,			September 30,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	5,445		$	7,619
Accounts receivable, net of allowances of $236 and $159		5,448			6,250
Inventories		449			1,167
Investment in sales-type lease, current		148			275
Capitalized commissions, current		300			440
Prepaid expenses and other current assets		930			1,065
Total current assets		12,720			16,816
Property and equipment:
Leasehold improvements		1,113			1,128
Computer equipment		8,377			7,960
Furniture and fixtures		1,549			1,366
Total property and equipment		11,039			10,454
Less accumulated depreciation and amortization		8,066			7,295
Property and equipment, net		2,973			3,159
Other assets:
Investment in sales-type lease, long-term		189			76
Capitalized commissions, long-term		69			100
Right-of-use assets under operating leases		2,853			2,081
Other long-term assets		769			397
Total assets	$	19,573		$	22,629
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	724		$	2,689
Accrued liabilities		2,387			2,565
Current portion of unearned revenue		7,947			10,402
Current portion of finance lease obligations		83			119
Current portion of operating lease obligations		1,150			1,425
Current portion of notes payable and warrant debt, net of discounts		—			1,104
Total current liabilities		12,291			18,304
Long-term portion of unearned revenue		1,850			1,736
Long-term portion of finance lease obligations		26			89
Long-term portion of operating lease obligations		1,721			665
Long-term portion of notes payable and warrant debt, net of discounts		552			2,673
Derivative liability, at fair value		63			66
Other liabilities		31			144
Total liabilities		16,534			23,677
Commitments and contingencies
Stockholders’ equity (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 shares issued and outstanding, at amounts paid in		—			—
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; 8,104,185 and 7,965,325 shares issued, respectively and 8,086,331 and 7,952,609 shares outstanding, respectively		81			80
Additional paid-in capital		209,693			209,022
Accumulated deficit		(205,984	)		(209,519	)
Accumulated other comprehensive loss		(582	)		(462	)
Treasury stock, at cost, 12,716 shares.		(169	)		(169	)
Total stockholders’ equity (deficit)		3,039			(1,048	)
Total liabilities and stockholders’ equity (deficit)	$	19,573		$	22,629

See accompanying notes to the condensed consolidated financial statements.

4

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,
	2021		2020			2021			2020
Revenue:
Product and other	$	2,659	$	2,744		$	7,406		$	7,612
Services		6,002		5,173			19,131			16,987
Total revenue		8,661		7,917			26,537			24,599
Cost of revenue:
Product and other		1,074		1,199			2,838			3,188
Services		1,548		971			4,770			3,566
Total cost of revenue		2,622		2,170			7,608			6,754
Gross margin		6,039		5,747			18,929			17,845
Operating expenses:
Selling and marketing		2,860		2,980			8,765			9,433
General and administrative		1,103		1,030			3,356			3,647
Product development		1,883		1,511			5,355			4,600
Total operating expenses		5,846		5,521			17,476			17,680
Income from operations		193		226			1,453			165
Non-operating income(expenes):
Interest expense, net		10		(140	)		(42	)		(621	)
Other expense, net		19		(106	)		(8	)		(150	)
Gain on debt forgiveness		2,325		—			2,325			—
Total non-operating income ( expenses)		2,354		(246	)		2,275			(771	)
Income (loss) before income taxes		2,547		(20	)		3,728			(606	)
Income tax benefit (expense)		99		127			(193	)		(12	)
Net income (loss)	$	2,646	$	107		$	3,535		$	(618	)
Dividends on preferred stock		—		—			—			—
Net income (loss) attributable to common stockholders	$	2,646	$	107		$	3,535		$	(618	)
Income (loss) per common share
– basic	$	0.33	$	0.01		$	0.44		$	(0.09	)
– diluted	$	0.31	$	0.01		$	0.42		$	(0.09	)
Weighted average common shares
– basic		8,060,036		7,399,545			8,021,852			6,972,924
– diluted		8,545,156		7,830,293			8,480,856			6,972,924

See accompanying notes to the condensed consolidated financial statements.

5

Sonic Foundry, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(Unaudited)

	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021			2020
Net income (loss)	$	2,646	$	107	$	3,535		$	(618	)
Other comprehensive income (loss)		
Foreign currency translation adjustment		7		15		(120	)		12
Comprehensive income (loss)	$	2,653	$	122	$	3,415		$	(606	)

See accompanying notes to the condensed consolidated financial statements.

6

Sonic Foundry, Inc.

Condensed Consolidated Statements of Stockholders' Equity (Deficit)

(in thousands)

(Unaudited)

										Accumulated
					Additional					other
			Common		paid-in		Accumulated			comprehensive			Treasury
	Preferred stock		stock		capital		deficit			loss			stock			Total
Balance, September 30, 2019	$	—	$	67	$	203,735	$	(209,340	)	$	(546	)	$	(169	)	$	(6,253	)
Stock compensation		—		—		104		—			—			—			104
Issuance of common stock		—		1		81		—			—			—			82
Conversion of related-party debt to common stock		—		11		4,994		—			—			—			5,005
Foreign currency translation adjustment		—		—		—		—			12			—			12
Net loss		—		—		—		(618	)		—			—			(618	)
Balance, June 30, 2020	$	—	$	79	$	208,914	$	(209,958	)	$	(534	)	$	(169	)	$	(1,668	)

										Accumulated
					Additional					other
			Common		paid-in		Accumulated			comprehensive			Treasury
	Preferred stock		stock		capital		deficit			loss			stock			Total
Balance, March 31, 2020	$	—	$	68	$	203,884	$	(210,065	)	$	(549	)	$	(169	)	$	(6,831	)
Stock compensation		—		—		18		—			—			—			18
Issuance of common stock		—		—		18		—			—			—			18
Conversion of related-party debt to common stock		—		11		4,994		—			—			—			5,005
Foreign currency translation adjustment		—		—		—		—			15			—			15
Net income		—		—		—		107			—			—			107
Balance, June 30, 2020	$	—	$	79	$	208,914	$	(209,958	)	$	(534	)	$	(169	)	$	(1,668	)

										Accumulated
					Additional					other
			Common		paid-in		Accumulated			comprehensive			Treasury
	Preferred stock		stock		capital		deficit			loss			stock			Total
Balance, September 30, 2020	$	—	$	80	$	209,022	$	(209,519	)	$	(462	)	$	(169	)	$	(1,048	)
Stock compensation		—		—		375		—			—			—			365
Issuance of common stock		—		1		296		—			—			—			297
Foreign currency translation adjustment		—		—		—		—			(120	)		—			(120	)
Net Income		—		—		—		3,535			—			—			3,535
Balance, June 30, 2021	$	—	$	81	$	209,693	$	(205,984	)	$	(582	)	$	(169	)	$	3,039

										Accumulated
					Additional					other
			Common		paid-in		Accumulated			comprehensive			Treasury
	Preferred stock		stock		capital		deficit			loss			stock			Total
Balance, March 31, 2021	$	—	$	81	$	209,523	$	(208,630	)	$	(589	)	$	(169	)	$	216
Stock compensation		—		—		92		—			—			—			82
Issuance of common stock		—		—		78		—			—			—			78
Foreign currency translation adjustment		—		—		—		—			7			—			7
Net income		—		—		—		2,646			—			—			2,646
Balance, June 30, 2021	$	—	$	81	$	209,693	$	(205,984	)	$	(582	)	$	(169	)	$	3,039

See accompanying notes to the condensed consolidated financial statements.

7

Sonic Foundry, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended
	June 30,
	2021			2020
Operating activities
Net Income (loss)	$	3,535		$	(618	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of other intangible		42			204
Depreciation and amortization of property and equipment		773			644
Loss on sale of fixed assets		6			—
Provision for doubtful accounts - including financing receivables		—			31
Provision for inventory reserve		—			90
Loss on conversion of related party debt to equity		—			26
Stock-based compensation expense related to stock options and warrants		375			104
Stock issued for board of director fees		40			61
Deferred loan interest to related party		—			322
Remeasurement loss (gain) on derivative liability		(3)			116
Gain on debt forgiveness		(2,325	)		—
Changes in operating assets and liabilities:
Accounts receivable		592			1,077
Inventories		712			(76	)
Investment in sales-type lease		1			136
Capitalized commissions		171			127
Prepaid expenses and other current assets		114			(128	)
Right-of-use assets under operating leases		(792	)		208
Operating lease obligations		795			(234	)
Other long-term assets		(395	)		(24	)
Accounts payable and accrued liabilities		(2,042	)		(749	)
Other long-term liabilities		(106	)		(2	)
Unearned revenue		(2,290	)		(153	)
Net cash (used in) provided by operating activities		(797	)		1,162
Investing activities
Purchases of property and equipment		(619	)		(683	)
Net cash used in investing activities		(619	)		(683	)
Financing activities
Proceeds from notes payable		—			2,778
Payments on notes payable		(935	)		(984	)
Proceeds from issuance of common stock		10			2
Proceeds from exercise of common stock options		247			18
Payments on finance lease obligations		(98	)		(162	)
Net cash (used in)provided by financing activities		(776	)		1,652
Changes in cash and cash equivalents due to changes in foreign currency		18			16
Net (decrease) increase in cash and cash equivalents		(2,174	)		2,147
Cash and cash equivalents at beginning of year		7,619			4,295
Cash and cash equivalents at end of period	$	5,445		$	6,442
Supplemental cash flow information:
Interest paid	$	32		$	114
Income taxes paid, foreign		84			141
Non-cash financing and investing activities:
Property and equipment financed by finance lease or accounts payable		—			478
Conversion of related party debt to common shares		—			5,005

See accompanying notes to the condensed consolidated financial statements.

8

Sonic Foundry, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2021

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Financial Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared on a basis substantially consistent with the Company's audited financial statements as of and for the year ended September 30, 2020 included in the Company's Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended June 30, 2021 are not necessarily indicative of the results that might be expected for the year ending September 30, 2020. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Impacts of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.  While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration, severity and impact of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as those of our key business partners, vendors and other counterparties for an indefinite period of time.  To support the health and well-being of our employees, business partners and communities, a vast majority of our employees have been working remotely since mid- March 2020 and continue to do so. The Company continues to follow guidelines outlined by the CDC and local county protocol. On August 2, 2021, the Company returned to in-person working. . The Company will implement a newly developed hybrid module to allow employees to work 60% in office and 40% from home.

COVID-19 has had negative impacts on our operations and the future impacts of the pandemic and any corresponding economic results are largely unknown and rapidly evolving.  Beginning in March 2020, the in-person events portion of our business was, and continues to be, significantly impacted by cancellations and/or postponements due to social distancing protocols enacted to stop the spread of the virus.  In response to the cancellations, the Company introduced a new virtual events platform as an alternate solution for our customers. While a return to in-person events and conferences was anticipated to begin during the summer of 2021, a full return is not anticipated until 2022. In addition, the Company is confident many future in-person events will be hybrid and will include our virtual events platform. 

Restructuring and exit activities

The determination of when the Company accrues for involuntary termination benefits under restructuring plans depends on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement. The Company accounts for on-going benefit arrangements, such as those documented by employment agreements, in accordance with Accounting Standards Codification 712 ("ASC 712") Nonretirement Postemployment Benefits. Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations. When applicable, the Company records such costs into operating expense.

For the three and nine months ended June 30, 2021, the Company expensed involuntary termination benefits of $56 and $157 thousand under ASC 420 compared to zero during the same periods last year.

Investment in Sales-Type Lease

The Company has entered into sales-type lease arrangements with certain customers, consisting of recorders leased with terms ranging from 3-5 years.

Investment in sales-type leases consists of the following (in thousands) as of June 30, 2021:

Investment in sales-type lease, gross:
2021	$	93
2022		116
2023		43
2024		43
2025		43
Gross investment in sales-type lease		338
Less: Unearned income		1
Total investment in sales-type lease	$	337
Current portion of total investment in sales-type lease	$	148
Long-term portion of total investment in sales-type lease		189
	$	337

9

 

Inventory

Inventory consists of raw materials and supplies used in the assembly of Mediasite recorders and finished units. Inventory of completed units and spare parts are carried at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. An obsolescence reserve has been established to account for slow moving inventory.

Inventory consists of the following (in thousands):

	June 30,			September 30,
	2021			2020
Raw materials and supplies	$	171		$	267
Finished goods		400			1,022
Less: Obsolescence reserve		(122	)		(122	)
	$	449		$	1,167

Asset Retirement Obligation

An asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset is recognized as a liability in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of the related long-term asset.  The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset.  As of  June 30, 2021 and September 30, 2020, the Company has recorded a liability of $127 thousand and $134 thousand, respectively, for retirement obligations associated with returning the MSKK leased property to the respective lessors upon the termination of the lease arrangement. Asset retirement obligations are included in other-long term liabilities on the condensed consolidated balance sheets.

Fair Value of Financial Instruments

In determining the fair value of financial assets and liabilities, the Company currently utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market, and adjusts for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible to the Company at the measurement date.

Level 2 Inputs: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3.

Financial Liabilities Measured at Fair Value on Recurring Basis

The fair value of the bifurcated conversion feature represented by the warrant derivative liability associated with the PFG debt is measured at fair value on a recurring basis based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described for share-based compensation which were generally observable (Level 2).

Financial liabilities measured at fair value on a recurring basis are summarized below (in thousands):

June 30, 2021	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	63	$	—	$	63

10

 

September 30, 2020	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	66	$	—	$	66

The gain or loss related to the fair value remeasurement on the derivative liability is included in the other expense line on the condensed consolidated statements of operations.

Financial Liabilities Measured at Fair Value on a Non-Recurring Basis

The initial fair values of PFG debt and warrant debt (see Note 4) were based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3). 

The Mr. Mark D. Burish ("Mr. Burish") warrant was measured at fair value using a Black Scholes model and the remaining fair value was allocated to the related Mr. Burish note purchase agreement (see Note 4) which management believes materially approximated the fair value based on calculating the present value of expected future cash flows (Level 3). The non-recurring fair value measurements were performed as of the date of issuance of the note purchase agreement and warrant. The discount was being amortized over the life of the related debt until May 2020, at which time the debt was extinguished and exchanged for the Company's common stock.

Financial Instruments Not Measured at Fair Value

The Company's other financial instruments consist primarily of cash and cash equivalents, accounts receivable, investment in sales-type lease, accounts payable, debt instruments and capital lease obligations. The book values of cash and cash equivalents, accounts receivable, investment in sales-type lease, and accounts payable are considered to be representative of their respective fair values due their short term nature. The carrying value of debt, including the current portion, approximates fair market value as the variable and fixed rate approximates the current market rate of interest available to the Company.

Legal Contingencies

When legal proceedings are brought or claims are made against the Company and the outcome is uncertain, we are required to determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings.

No legal contingencies were recorded or were required to be disclosed for the three or nine months ended June 30, 2021 or 2020.

Stock Based Compensation

The Company uses a lattice valuation model to account for all employee stock options granted. The lattice valuation model is a more flexible analysis to value options because of its ability to incorporate inputs that change over time, such as actual exercise behavior of option holders. The Company uses historical data to estimate the option exercise and employee departure behavior in the lattice valuation model. Expected volatility is based on historical volatility of the Company’s stock. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods the options are expected to be outstanding is based on the U.S. Treasury yields in effect at the time of grant. Forfeitures are based on actual behavior patterns. The expected exercise factor and forfeiture rates are calculated using historical exercise and forfeiture activity for the previous three years.

11

 

The fair value of each option grant is estimated using the assumptions in the following table:

	Nine Months Ended
	June 30,
	2021	2020
Expected life	4.3-4.7 years	4.5 years
Risk-free interest rate	0.33% - 0.58%	1.14% - 1.63%
Expected volatility	65.23% - 83.29%	72.40% - 73.46%
Expected forfeiture rate	14.18% -16.41%	15.05% - 15.38%
Expected exercise factor	1.2	1.2
Expected dividend yield	0%	0%

A summary of option activity at June 30, 2021 and changes during the nine months then ended is presented below:

				Weighted-		Weighted-Average
				Average		Remaining Contractual
	Options			Exercise Price		Period in Years
Outstanding at October 1, 2020		1,707,515,		$	5.08		4.6
Granted		564,967			3.40		9.8
Exercised		(119,902	)		2.22		0.0
Forfeited		(271,060	)		7.16		0.0
Outstanding at June 30, 2021		1,881,520			4.46		6.4
Exercisable at June 30, 2021		1,289,896			5.14		5.2

A summary of the status of the Company’s non-vested options and changes during the nine month period ended June 30, 2021 is presented below:

				Weighted-Average
				Grant Date Fair
Non-vested Options	Options			Value
Non-vested at October 1, 2020		339,897		$	0.60
Granted		564,967			1.58
Vested		(265,826	)		0.89
Forfeited		(47,414	)		1.15
Non-vested at June 30, 2021		591,623		$	1.38

The weighted average grant date fair value of options granted during the nine months ended June 30, 2021 was $1.58. As of June 30, 2021, there was $557 thousand of total unrecognized compensation cost related to non-vested stock-based compensation, with total forfeiture adjusted unrecognized compensation cost of $408 thousand. The cost is expected to be recognized over a weighted-average remaining life of 4.3 years.

Stock-based compensation recorded in the three and nine months ended June 30, 2021 was $82 thousand and $365 thousand, respectively. Stock-based compensation recorded in the three and nine months ended June 30, 2020 was $18 thousand and $104 thousand, respectively. There was $59 thousand and $247 thousand in cash received from transactions under all stock option plans during the three and nine months ended June 30, 2021 and $18 thousand and $18 thousand during the same period of the three and nine months ended June 30, 2020. There were no tax benefits realized for tax deductions from option exercises in either of the three and nine month periods ended June 30, 2021 or 2020. The Company currently expects to satisfy share-based awards with registered shares available to be issued.

The Company also has an Employee Stock Purchase Plan ("Purchase Plan") under which an aggregate of 300,000 common shares may be issued. The board passed a resolution in December 2020 to increase the share count by an additional 100,000 shares, which was approved by common stockholders in January 2021. A total of 99,667 shares are available to be issued under the plan at  June 30, 2021. The Company recorded stock compensation expense under this plan of $1 thousand and $6 thousand for the for the three and nine month periods ended June 30, 2021 and less than $1 thousand and $2 thousand for the three and nine month periods ended June 30, 2020.

12

 

Preferred Stock and Dividends

No shares of Preferred Stock, Series A were issued and outstanding as of June 30, 2021 and 2020.

Per Share Computation

Basic earnings (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares that may be repurchased, and excludes any dilutive effects of options and warrants. In periods where the Company reports net income, diluted net income per share is computed using common equivalent shares related to outstanding options and warrants to purchase common stock. The numerator for the calculation of basic and diluted earnings per share is net income (loss) attributable to common stockholders. The following table sets forth the computation of basic and diluted weighted average shares used in the earnings per share calculations:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Denominator for basic net income (loss) per share - weighted average common shares		8,060,036		7,399,545		8,021,852		6,972,924
Effect of dilutive options and warrants (treasury method)		485,120		430,748		459,004		—
Denominator for diluted net income (loss) per share - adjusted weighted average common shares		8,545,156		7,830,293		8,480, 856		6,972,924
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net loss per share because they are antidilutive		1,078,832		1,630,706		1,291,332		2,061,454

The Company issued 945,946 shares on July 27, 2021 in conjunction with an equity raise (see Note 7). If these shares were issued at the end of the reporting period, it would materially change the number of common shares outstanding.

Liquidity

At June 30, 2021, approximately $3.4 million of cash and cash equivalents was held by the Company's foreign subsidiaries.

The Company believes its cash position plus available resources is adequate to accomplish its business plan through at least the next 12 months. The Company completed a common stock issuance to certain investors totaling $3.5 million, net of $75 thousand expenses, on July 27, 2021. The proceeds of the stock issuance are intended to satisfy the initial listing requirements of the Nasdaq Capital Market. Additionally, the Company signed a line of credit agreement on July 28, 2021, with US Bank for $3 million at an annual rate equal to 1.35% plus the greater of zero percent and the one month LIBOR rate. The Company will likely evaluate lease opportunities to finance equipment purchases in the future and support working capital needs as well as seek additional equity financing opportunities. However, there are no assurances that these will be on terms acceptable to the Company.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", ("ASU 2019-12"). The amendments in this ASU affect entities within the scope of Topic 740. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for public entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. An entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the guidance and its impact to the financial statements.

Accounting standards that have been issued but are not yet effective by the FASB or other standards-setting bodies that do not require adoption until a future date, which are not discussed above, are not expected to have a material impact on the Company’s financial statements upon adoption.

13

2. Related Party Transactions

During the three and nine months ended June 30, 2021, the Company incurred fees of $30 thousand and $91 thousand, respectively, to a law firm, a partner of which is a director and stockholder of the Company. The Company incurred similar fees of $112 thousand and $372 thousand during the three and nine months ended June 30, 2020. The Company had recorded liabilities of $18 thousand and $7 thousand for unbilled services to the same law firm at June 30, 2021 and September 30, 2020, respectively.

On May 13, 2020, the Company entered into a debt conversion agreement with Mr. Burish to convert all outstanding debt owed to Mr. Burish into common stock at a conversion price of $5.00 per share. The total debt amount, including accrued interest and fees, of $5.6 million was converted into 1,114,723 shares of common stock. The transaction was recommended by the Company's Special Committee of Independent and Disinterested Directors, unanimously approved by all disinterested directors of the Company, and ratified by shareholders at the Company's most recent shareholder meeting. Silverwood Partners, the Special Committee's financial advisor, issued a fairness opinion in connection with the transaction. The debt conversion was also ratified by the shareholders at the annual shareholders meeting held on January 28, 2021.

Mr. Burish beneficially owns more than 5% of the Company’s common stock. Mr. Burish also serves as the Chairman of the Board of Directors. An affiliated party beneficially owns more than 5% of the Company's common stock. All transactions with Mr. Burish and with the affiliated party were approved by a Special Committee of Disinterested and Independent Directors.

14

 

3. Commitments

Inventory Purchase Commitments

The Company enters into unconditional purchase commitments on a regular basis for the supply of Mediasite product for hardware inventory, as well as services to support our hosting environment, which are not recorded on the Company's condensed consolidated balance sheet. At June 30, 2021, the Company had an obligation to purchase $529 thousand of Mediasite product and $62 thousand of services during the remainder of fiscal 2021, and of services $423 thousand during fiscal 2022 and 2023.

Leases

The Company has operating leases for corporate office space with various expiration dates. Our leases have remaining lease terms of up to three years, some of which include escalation clauses, renewal options for up to twelve years or termination options within one year.

We determine if an arrangement is a lease upon contract inception. The Company has both operating and finance leases. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments according to the arrangement.

A contract contains a lease if the contract conveys the right to control the use of the identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

Lease right-of-use assets and lease liabilities are recognized as of the commencement date based on the present value of the lease payments over the lease term. The lease right-of use asset is reduced for tenant incentives and includes any initial direct costs incurred. We use the implicit interest rate when it is readily determinable. Otherwise, the present value of future minimum lease payments is determined using the Company's incremental borrowing rate. The incremental borrowing rate is based on the interest rate of the Company's most recent borrowing.

The lease term we use for the valuation of our right-of-use assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense is recognized on a straight-line basis over the expected lease term for operating leases. Amortization expense of the right-of-use asset for finance leases is recognized on a straight-line basis over the lease term and interest expense for finance leases is recognized based on the incremental interest rate.

Right-of-use assets and lease liabilities are recognized for our leases. Right-of-use assets under finance leases are included in property and equipment on the condensed consolidated balance sheets and have a net carrying value of $191 thousand at September 30, 2020 and $93 thousand at June 30, 2021.

We have operating lease arrangements with lease and non-lease components. The non-lease components in our arrangements are not significant when compared to the lease components. For all operating leases, we account for the lease and non-lease components as a single component. In June 2021, the landlord approved and granted the COVID landlord rent credit requested by the Company for the current lease ending December 31, 2021. The landlord granted a monthly rent credit of $53 thousand for the period of April 1, 2021 to September 30, 2021. The company elected to treat the rent credit as variable lease payments for the periods effected.

Effective June 2021, the Company renewed its building leases with a two and half year term starting January 1, 2022. Monthly rent payments will be $56 thousand in year 1 and increase annually at an escalation rate of 4.30% in year 2 and 3.30% in year 3. The Company has the option to renew for an additional 3 year term, but has elected to exclude the optional renewal period from the ROU asset and lease liability due to uncertainty of the likelihood of renewal at this time.

As of June 30, 2021, future maturities of operating and finance lease liabilities for the fiscal years ended September 30 are as follows (in thousands):

	Operating Leases			Finance Leases
2021 (remaining)	$	380		$	23
2022		1,007			79
2023		865			7
2024		700			5
2025		34			—
Thereafter		65			—
Total		3,051			114
Less: imputed interest		(180	)		(5	)
Total	$	2,871		$	109

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Supplemental information related to leases is as follows (in thousands, except lease term and discount rate):

	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Operating lease costs	$	1,107	$	990
Variable operating lease costs		(110)		22
Total operating lease cost	$	997	$	1,012
Finance lease cost:
Amortization of right-of-use assets	$	47	$	147
Interest on lease liabilities		8		17
Total finance lease cost	$	55	$	164

Variable lease costs include operating costs for U.S. office lease based on square footage and Consumer Price Index ("CPI") rent escalation and related VAT for office lease in the Netherlands, and COVID-19 rent credit.

Supplemental cash flow information related to operating and finance leases were as follows (in thousands):

	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	956	$	1,016
Operating cash outflows for finance leases		8		17
Financing cash outflows for finance leases		98		162

Other information related to leases was as follows:

	June 30, 2021			June 30, 2020
Weighted average remaining lease term (in years)
Operating leases		3.0			2.4
Finance leases		1.5			2.2
Weighted average discount rate
Operating leases		4.00	%		9.54	%
Finance leases		7.28	%		7.22	%

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4. Credit Arrangements

Partners for Growth V, L.P.

On May 11, 2018, Sonic Foundry, Inc., entered into a Loan and Security Agreement (the “2018 Loan and Security Agreement”) with Partners for Growth V, L.P. (“PFG V”).

The 2018 Loan and Security Agreement provides for a Term Loan ("Term Loan") in the amount of $2,500,000, which was disbursed in two (2) Tranches as follows: Tranche 1 was disbursed on May 14, 2018 in the amount of $2,000,000; and Tranche 2 in the amount of $500,000, was disbursed on November 8, 2018. Each tranche of the Term Loan bears interest at 10.75% per annum. Tranche 1 of the Term Loan is payable interest only until November 30, 2018. Thereafter, principal is due in 30 equal monthly principal installments, plus accrued interest, beginning December 1, 2018 and continuing until  May 1, 2021, when the principal balance is to be paid in full. Tranche 2 of the Term Loan is payable using the same repayment schedule as Tranche 1. Upon maturity, Sonic Foundry is required to pay PFG V a cash fee of $150,000. The principal of the Term Loan may be prepaid at any time without penalty as of May 14, 2019. The Term Loan is collateralized by substantially all the Company’s assets, including intellectual property.

Coincident with execution of the 2018 Loan and Security Agreement, the Company entered into a Warrant Agreement (“Warrant”) with PFG V. Pursuant to the terms of the Warrant, the Company issued to PFG V a warrant to purchase up to 66,000 shares of common stock of the Company at an exercise price of $2.57 per share, subject to certain adjustments. Pursuant to the Warrant, PFG V is also entitled, under certain conditions, to require the Company to exchange the Warrant for the sum of $250,000. All warrants issued in connection with PFG V expire on May 11, 2023.

At  June 30, 2021, and September 30, 2020, the estimated fair value of the derivative liability associated with the warrants issued in connection with the 2018 Loan and Security Agreement, was $63 thousand and $66 thousand, respectively. Included in other expense, the remeasurement gain on the derivative liability during the three and nine months ended June 30, 2021 was $22 thousand and $3 thousand, respectively, compared to remeasurement loss of $52 thousand and $116 thousand, respectively, during the three and nine months ended June 30, 2020.

The proceeds from the 2018 Loan and Security Agreement were allocated between the PFG V Debt and the Warrant Debt (inclusive of its conversion feature) based on their relative fair value on the date of issuance which resulted in carrying values of $2.3 million and $156 thousand, respectively. The warrant debt is treated together as a debt discount on the PFG V Debt and is being accreted to interest expense under the effective interest method over the three-year term of the PFG V Debt and the five-year term of the Warrant Debt. The Company recorded accretion of discount expense associated with the warrants issued with the PFG V loan of $4 thousand and $7 thousand for the three and nine months ended June 30, 2021, respectively, compared to $6 thousand and $17 thousand in the same periods last year.

In addition, $6 thousand and $34 thousand of amortization of the debt discount was recorded for the three and nine months ended June 30, 2021, respectively, compared to$14 thousand and $42 thousand in the same periods last year. At  June 30, 2021, the PFG V Debt fully matured and the carrying value of the Warrant Debt (inclusive of its conversion feature)  was $191 thousand. In addition, the Company paid PFG V a cash fee of $150,000 at the time of maturity (the “back-end fee”). During the three and nine months ended June 30, 2021 the Company recorded interest expense associated with recognition of the back-end fee of $6 thousand and $31 thousand, respectively, compared to $13 thousand and $38 thousand in the same periods last year.

The non-cash effective interest expense is calculated on the net balance of the PFG V Debt, debt discount, back-end fee and related loan origination fees, on a monthly basis. During the three and nine months ended June 30, 2021, non-cash interest expense of $11 thousand and $53 thousand was recorded compared to $7 and $3, respectively, during the same periods last year.

At June 30, 2021, a gross balance of $0 thousand was outstanding on the term debt with PFG V. At September 30, 2020, a gross balance of $667 thousand was outstanding with PFG V.

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Initial Notes of the February 28, 2019 Note Purchase Agreement

On January 4, 2019, Sonic Foundry, Inc. and Mr. Burish entered into a Promissory Note (the "Promissory Note") pursuant to which Mr. Burish purchased a 9.25% Unsecured Promissory Note for $1,000,000 in cash. Interest accrued and outstanding principal on the Promissory Note was due and payable on January 4, 2020. The Promissory Note may be prepaid at any time without penalty. The Promissory Note was later included in the Note Purchase Agreement, dated February 28, 2019, as detailed below.

On January 31, 2019, Sonic Foundry, Inc. and Mr. Burish entered into a Promissory Note (the "January 31, 2019 Promissory Note") pursuant to which Mr. Burish purchased a 9.25% Unsecured Promissory Note for $1,000,000 in cash. Interest accrued and outstanding principal on the January 31, 2019 Promissory Note was due and payable on January 31, 2020. The January 31, 2019 Promissory Note may be prepaid any time without penalty. The note may be paid by the Company by issuing common stock to Mr. Burish, with each share valued at $1.30 per share. The January 31, 2019 Promissory Note was later included in the Note Purchase Agreement, dated February 28, 2019, as detailed below.

On February 14, 2019, Sonic Foundry, Inc. and Mr. Burish entered into a Promissory Note (the "February 14, 2019 Promissory Note") pursuant to which Mr. Burish purchased a 9.25% Unsecured Promissory Note for $1,000,000 in cash. Interest accrued and outstanding principal on the February 14, 2019 Promissory Note was due and payable on February 14, 2020. The February 14, 2019 Promissory Note may be prepaid any time without penalty. The note may be paid by the Company by issuing common stock to Mr. Burish with each share valued at $1.30 per share. The February 14, 2019 Promissory Note was later included in the Note Purchase Agreement, dated February 28, 2019, as detailed below.

February 28, 2019 Note Purchase Agreement

On February 28, 2019, Sonic Foundry, Inc. entered into a Note Purchase Agreement (the "Note Purchase Agreement") with Mr. Burish.

The Note Purchase Agreement provided for subordinated secured promissory notes (the "Subordinated Promissory Notes") in an aggregate original principal amount of up to $5,000,000. Mr. Burish acquired from the Company (a) on the initial closing date, the notes in an aggregate principal amount of $3,000,000 (the "Initial Notes") and (b) two additional tranches, each in the amount of $1,000,000 and payable at any time prior to the first anniversary of the Agreement (the "Additional Notes" and together with the Initial Notes, collectively, the "Purchase Price"). The Initial Notes were previously disbursed in January and February of 2019, as detailed above (the Promissory Note, the January 31, 2019 Promissory Note, and the February 14, 2019 Promissory Note, collectively referred to as the "Initial Notes"). The fourth tranche was disbursed on March 13, 2019 and the fifth and final tranche was disbursed on April 4, 2019.

The Subordinated Promissory Notes accrued interest at the variable per annum rate equal to the Prime Rate (as defined) plus four percent (4.00%). The outstanding principal balance of the Subordinated Promissory Notes, plus all unpaid accrued interest, plus all outstanding and unpaid obligations, was set to mature on February 28, 2024 (the "Maturity Date"). Principal installments of $100,000 were to begin monthly on August 31, 2020, and continue through the Maturity Date. The Note Purchase Agreement dated February 28, 2019 was subordinated to the existing PFG loan.

At each anniversary of the Closing, an administration fee will be payable to Mr. Burish equal to 0.5% of the purchase price less principal payments made.

18

 

The proceeds from the Note Purchase Agreement were allocated between the Subordinated Promissory Notes and the Burish Warrant based on their relative fair value on the date of issuance. The warrant was treated together as a debt discount on the Subordinated Notes Payable and was accreted to interest expense under the effective interest rate method over the five-year term of the Subordinated Notes Payable. During the first fiscal quarter of 2020, the Company recorded accretion of discount expense associated with the Subordinated Promissory Notes of $34 thousand.

The non-cash effective interest expense was calculated on the net balance of the Subordinated Promissory Notes, Burish Warrant, and related loan origination fees, on a monthly basis. During the three months ended December 31, 2019, $15 thousand of non-cash interest benefit related to the effective interest rate on the Subordinated Promissory Notes was recorded.

February 28, 2019 Warrant

Coincident with execution of the Note Purchase Agreement, the Company entered into a Warrant Agreement ("Burish Warrant") with Mr. Burish. Pursuant to the terms of the Burish Warrant, the Company issued to Mr. Burish a warrant to purchase up to 728,155 shares of common stock of the Company at an exercise price of $1.18 per share, subject to certain adjustments.

On April 25, 2019, Mr. Burish exercised his warrant to purchase 728,155 shares of common stock of the Company at an exercise price of $1.18 per share. A special committee of disinterested and independent directors approved the issuance of the Subordinated Promissory Notes and the Burish Warrant.

May 13, 2020 Debt Conversion Agreement

On May 13, 2020, the Company entered into a debt conversion agreement with Mr. Burish to convert all outstanding debt owed to Mr. Burish into common stock at a conversion price of $5.00 per share. The net carrying value of $5.0 million, including principal and accrued interest of $5.6 million less debt discount and loan origination fees of $596 thousand, was converted into 1,114,723 shares of common stock. The debt conversion was treated as a debt extinguishment, and resulted in a net loss of $26 thousand.

Paycheck Protection Program (PPP) Loan Dated April 20, 2020

Following the approval of the Board of Directors, the Company and First Business Bank entered into a $2.3 million Promissory Note (the "Promissory Note") under the Paycheck Protection Program (PPP) contained within the new Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP loan had a term of two years for those companies receiving loan proceeds prior to June 5, 2020, was unsecured, and was guaranteed by the U.S. Small Business Administration ("SBA"). The loan carried a fixed interest rate of 1% per annum. Under the terms of the CARES Act, the Company was eligible for and submitted its application for forgiveness of all loan proceeds on March 2, 2021. On June 14, 2021 the Company received SBA approval of forgiveness for the loan principal of $2,314,815 and $26,382 in interest.

When PPP Loan was received, US GAAP guidance for debt (ASC 470) was followed by the Company. Liability was recognized and interest was accrued over the term of the loan. Therefore, according to the guidance, the amount forgiven is recorded as gain from forgiveness of debt and the gain from forgiveness is presented on its own line within the statement of operations as other income. Previously recorded interest expense was reversed during the three months ended June 30, 2021. 

Other Indebtedness

On January 30, 2020, Mediasite K.K. entered into a Term Loan ("Term Loan") with Sumitomo Mitsui Banking Corporation for $460 thousand in cash. The Term loan accrued interest at an annual rate of 1.475%. Beginning in January 2020, principal payments in 12 equal monthly installments, plus accrued interest were made. The principal has been paid in full as of  December 30, 2020.

At June 30, 2021 and September 30, 2020, no balance was outstanding on the line of credit with Mitsui Sumitomo Bank. The credit facility is related to Mediasite K.K., and accrues interest at an annual rate of approximately one-and-one half percent (1.575%). The available line of credit at June 30, 2021 was $485 thousand and maturity date is on February 28, 2022.

On August 20, 2020, Mediasite K.K. and Sumitomo Mitsui Banking Corporation entered into a $379 thousand Promissory Note under an initiative by the Japanese Finance Corporation government institution in response to the Cabinet Decision entitled "Emergency Economic Measures to Cope With COVID-19." Extending financial relief to organizations impacted by COVID-19, the loan has a term of three years and carries a fixed interest rate of 0.46% per annum. Government subsidies provided through the Japanese Finance Corporations provide interest relief throughout the term of the loan. In addition, the loan agreement includes a three year grace period with principal payments deferred through the end of the loan, which is September 30, 2023. As of June 30, 2021 the full principal amount of the loan has been included in long-term notes payable.

19

 

5. Income Taxes

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has Net Operating Loss (NOL) carried over from previous years. The Company doesn't have income tax liability until it exhausts its NOL. Therefore, the Company had no accruals for interest and penalties on the Company’s Condensed Consolidated Balance Sheets at June 30, 2021 or September 30, 2020, and has not recognized any interest or penalties in the Condensed Consolidated Statements of Operations for either of the three or nine months ended June 30, 2021 or 2020.

The Company’s tax rate differs from the expected tax rate each reporting period as a result of permanent differences, the valuation allowance, international tax items, and forgiveness of the PPP loan. The Company's income tax expense for the three and nine months ended June 30, 2021 and 2020 primarily consists of income tax expense at its foreign subsidiaries.

20

 

6. Revenue

Disaggregation of Revenues

The following tables summarize revenues from contracts with customers for the three and nine months ended June 30, 2021 and 2020, respectively, (in thousands) by subsidiary, which includes the parent (SOFO), our Netherlands location (SFI) and our Japanese location (MSKK) :

Three months ended June 30, 2021
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	1,635	$	179	$	185	$	(297	)	$	1,702
Software		595		123		295		(76	)		937
Shipping		18		2		—		—			20
Product and other total		2,248		304		480		(373	)		2,659
Support		1,623		159		202		(222	)		1,762
Hosting		1,472		282		438		(169	)		2,023
Events		1,265		32		448		—			1,745
Installs, training & other		55		1		416		—			472
Services total		4,415		474		1,504		(391	)		6,002
Total revenue	$	6,663	$	778	$	1,984	$	(764	)	$	8,661

Nine Months Ended June 30, 2021
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	4,103	$	522	$	962	$	(745	)	$	4,842
Software		2,035		343		469		(332	)		2,515
Shipping		45		4		—		—			49
Product and other total		6,183		869		1,431		(1,077	)		7,406
Support		5,122		483		679		(640	)		5,644
Hosting		4,320		788		1,566		(232	)		6,442
Events		3,102		79		1,850		—			5,031
Installs, training & other		744		28		1,242		—			2,014
Services total		13,288		1,378		5,337		(872	)		19,131
Total revenue	$	19,471	$	2,247	$	6,768	$	(1,949	)	$	26,537

21

 

Three months ended June 30, 2020
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	1,635	$	272	$	111	$	(310	)	$	1,708
Software		707		105		330		(122	)		1,020
Shipping		13		3		—		—			16
Product and other total		2,355		380		441		(432	)		2,744
Support		1,865		146		458		(128	)		2,341
Hosting		1,358		145		202		—			1,705
Events		702		23		168		—			893
Installs, training & other		217		17		—		—			234
Services total		4,142		331		828		(128	)		5,173
Total revenue	$	6,497	$	711	$	1,269	$	(560	)	$	7,917

Nine Months Ended June 30, 2020
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	4,244	$	491	$	308	$	(507	)	$	4,536
Software		2,304		358		561		(356	)		2,867
Shipping		203		6		—		—			209
Product and other total		6,751		855		869		(863	)		7,612
Support		5,762		437		1,695		(488	)		7,406
Hosting		3,496		425		899		—			4,820
Events		2,725		97		1,495		—			4,317
Installs, training & other		425		19		—		—			444
Services total		12,408		978		4,089		(488	)		16,987
Total revenue	$	19,159	$	1,833	$	4,958	$	(1,351	)	$	24,599

Transaction price allocated to future performance obligations

As of June 30, 2021, the aggregate amount of the transaction price that is allocated to our future performance obligations was approximately $3.2 million in the next three months, $7.9 million in the next twelve months, and the remaining $1.9 million thereafter.

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Disclosures related to our contracts with customers

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current unearned revenue.

Unearned revenues

Unearned revenues represent our obligation to transfer products or services to our client for which we have received consideration, or an amount of consideration is due, from the client. During the three and nine months ended June 30, 2021, revenues recognized related to the amount included in the unearned revenues balance at the beginning of the period was $2.0 million and $9.1 million , respectively, compared to $2.2 million and $8.9 million, respectively, recognized during the  three and nine months ended June 30, 2020.

Assets recognized from the costs to obtain our contracts with customers

We recognize an asset for the incremental costs of obtaining a contract with a customer. We amortize these deferred costs, primarily capitalized commissions, proportionate with related revenues over the period of the contract. During the three and nine months ended June 30, 2021, amortization expense related to the amount included in the capitalized commissions at the beginning of the period was $96 thousand and $440 thousand, respectively, compared to $114 thousand and $444 thousand, respectively, recognized during the three and nine months ended June 30, 2020.

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7. Subsequent Event

Equity Raise:

On July 20, 2021, the Company entered into a transaction with four investors on identical terms pursuant to which they agreed to purchase, and the Company agreed to issue and sell, an aggregate of 945,946 shares at a price of $3.70 per share (total of $3,500,000). The Company closed on the issuance and sale on July 27, 2021. The Company and the investors also entered into (i) warrant agreements pursuant to which the investors have the right to purchase 141,892 shares at a price of $5.50 per share on or before July 20, 2026 and, (ii) registration rights agreements (“Rights Agreement”) whereby the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission (the “Commission”) within six months after the effective date of the Rights Agreement and further agreed to use its commercially reasonable efforts to have the registration statement declared effective and to ensure that the registration statement remains effective throughout the term of the Rights Agreement.

The investors above included Mr. Mark Burish, the Company’s chairman and largest shareholder who purchased $1,250,000 of common stock for a total of 337,838 shares and 50,676 warrants. The Company’s special committee of disinterested directors met several times to discuss and negotiate the terms of the above transactions, including the participation of Mr. Burish. The special committee unanimously approved such terms.

   Line of Credit

The Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association (the “Bank”) on July 28, 2021. Under the Credit Agreement the Company may borrow the lesser of $3,000,000 or the applicable Borrowing Base comprised of (1) 80% of Qualified Accounts Receivable; (2) 50% of Qualified Inventory; and (3) an available over-advance of $500,000.

The Credit Agreement matures on July 28, 2022, is secured by all assets of the Company and accrues an interest rate equal to the one-month LIBOR rate plus 1.35% per annum, paid monthly. The Credit Agreement requires compliance with typical warranties and covenants including financial covenants of (1) Fixed Charge Coverage Ratio, as defined in the agreement, of at least 1.20:1 at the end of each quarter and (2) Senior Cash Flow Coverage Ratio, as defined in the agreement, of no more than 3.00:1 for each fiscal quarter.

In connection with the Credit Agreement, the Company entered into the Stock Pledge Agreement with the Bank, as a condition of the Credit Loan. Upon default, the Bank shall have the right to transfer and claim the securities of the subsidiaries, Sonic Foundry International B.V. in Netherland and Mediasite K.K. in Japan.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Risks and Uncertainties

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including the following sections: “Management’s Discussion and Analysis,” and “Risk Factors.” These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors” (Part I, Item 1A of the Company’s Annual Report on Form 10-K for the Fiscal Year ended September 30, 2020 and Part II, Item 1A of this Form 10-Q), “Quantitative and Qualitative Disclosures about Market Risk” (Part I, Item 3 of this Form 10-Q and Part II, Item 7A of the Company’s Annual Report on Form 10-K for the Fiscal Year ended September 30, 2020), and “Management’s Discussion and Analysis” (Part I, Item 2 of this Form 10-Q). We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

Overview

Sonic Foundry, Inc. is a trusted global leader for video capture, management and streaming solutions. Trusted by educational institutions, corporations and government entities, Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming video and rich media. Mediasite transforms communications, training, education and events for our customers.

Recent Developments

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration, severity and impact of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as those of our key business partners, vendors and other counterparties for an indefinite period of time. To support the health and well-being of our employees, business partners and communities, a vast majority of our employees have been working remotely since mid-March 2020 and continue to do so. The Company continues to follow guidelines outlined by the CDC and local county protocol.

On August 2, 2021, the Company returned to in-person working.

The Company will implement a newly developed hybrid module to allow 60% in office and 40% work from home.

COVID-19 has had both positive and negative near-term impacts on our operations and the future impacts of the pandemic and any corresponding economic results are largely unknown and rapidly evolving. Beginning in March 2020 and continuing through this quarter and beyond, the in-person events portion of our business continues to be impacted by cancellations and/or postponements due to social distancing protocols enacted to stop the spread of the virus. While there was a return in the current quarter to the type of smaller, in-person web events that are common for our Japan subsidiary, the events business in the US remains primarily a virtual events initiative, which has been a growing portion of our events business. In addition, the closure of educational institutions globally and the negative financial impact on their funding, could impact our sales in the upcoming quarters. While the virus has increased awareness of the need for distance learning tools and the adoption of video as a necessary communication medium, it is impossible for us to predict with confidence the long-term financial impact on our business including results of operations and liquidity.

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Restructuring and exit activities

The determination of when the Company accrues for involuntary termination benefits under restructuring plans depends on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement. The Company accounts for on-going benefit arrangements, such as those documented by employment agreements, in accordance with Accounting Standards Codification 712 ("ASC 712") Nonretirement Postemployment Benefits. Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations. When applicable, the Company records such costs into operating expense.

During the fourth quarter of fiscal 2020, the Company expensed involuntary termination benefits of $705 thousand under ASC 712. During the three and nine months ended June 30, 2021, the Company expensed involuntary termination benefits of $56 and $157 thousand under ASC 420 compared to zero during the same periods last year. No further expenses relating to this restructuring are anticipated in future quarters. The expense is recorded in the general and administrative expense line in the condensed consolidated statement of operation. 

RESULTS OF OPERATIONS

Revenue

Revenue from our business includes the sale of Mediasite recorders and server software products and related services contracts, such as customer support, installation, customization services, training, content hosting and event services. We market our products to educational institutions, corporations and government agencies that need to deploy, manage, index and distribute video content on Internet-based networks. We reach both our domestic and international markets through reseller networks, a direct sales effort and partnerships with system integrators.

Q3-2021 compared to Q3-2020

Q3-2021 revenue of  $8.7 million increased 9% compared to  Q3-2020 revenue of $7.9 million. Revenue consisted of the following:

• Product and other revenue from sale of Mediasite recorder units and server software Q3-2021 revenue of $2.7 million remained consistent with  Q3-2020.

•   Service revenue represents the portion of fees charged for Mediasite customer support contracts amortized over the length of the contract, typically 12 months, as well as training, installation, events and content hosting services. Service revenue increased $829 thousand or 16% from $5.2 million in Q3-2020 to $6.0 million in Q3-2021, primarily due to the Company's COVID-19 recovery in events and growth in hosting.

• At June 30, 2021, $9.8 million of revenue was deferred, of which we expect to recognize $7.9 million in the next twelve months, including approximately $3.2 million in the quarter ending September 30, 2021. At June 30, 2020, $11.3 million of revenue was deferred.

• Other revenue relates to freight charges billed separately to our customers.

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YTD-2021 (nine months) compared to YTD-2020 (nine months)

Revenue for YTD-2021 totaled $26.5 million compared to YTD-2020 revenue of $24.6 million, a $1.9 million or 8% increase. Revenue consisted of the following:

• $7.4 million product and other revenue from the sale of recorders and software during YTD-2021 versus $7.6 million YTD-2020. The decrease reflects continued shift in demand from on-premise to cloud deployments as well as continued impact of COVID-19 on recorder and software capture installations.

•   $19.1 million revenue from services compared to $17.0 million in 2020. The $2.1 million or 12.6% increase is due to the Company's growth in hosting and events.

Gross Margin

Q3-2021 compared to Q3-2020

Gross margin for Q3-2021 was $6.0 million or 70% of revenue compared to Q3-2020 gross margin of $5.7 million or 73%. The significant components of cost of revenue include:

• Product costs. Product costs consist of costs associated with our Mediasite recorder hardware, freight, labor and certain allocated costs. These costs were $1.1 million in Q3-2021 and $1.2 million in Q3-2020, resulting in gross margin on products of 60% and 56%, respectively.

• Services costs. Service costs consist of staff wages for tech support, hosting and events, operating costs for events and hosting, as well as depreciation expense for hosting infrastructure. These costs were $1.5 million in Q3-2021 and $971 thousand in Q3-2020, resulting in gross margin on services of 74% and 81%, respectively. The increase in service cost was a result of $115 thousand in depreciation expense associated with the new data centers to support hosting business in the United States, United Kingdom, and Japan. The remaining difference is primarily associated with the increase in hosting expenses required to support ongoing hosting operations.

YTD-2021 (nine months) compared to YTD-2020 (nine months)

Gross margin for YTD-2021 was $18.9 million or 71% of revenue compared to YTD-2020 gross margin of $17.8 million or 73%. The significant components of cost of revenue include:

• Product costs. YTD-2021 product costs were $2.8 million compared to $3.2 million in YTD-2020, resulting in gross margin on products of 62% in YTD-2021 and 58% in YTD-2020.

• Service costs. YTD-2021 service costs were $4.8 million compared to $3.6 in YTD-2020, resulting in gross margin on services of 75% in YTD-2021 and 79% in YTD-2020.

Operating Expenses

Selling and Marketing Expenses

Selling and marketing expenses include wages and commissions for sales, marketing and business development personnel, print advertising and various promotional expenses for our products. Timing of these costs may vary greatly depending on introduction of new products and services or entrance into new markets, or participation in major tradeshows.

Q3-2021 compared to Q3-2020

Selling and marketing expenses decreased $120 thousand or 4% from $3 million in Q3-2020 to $2.9 million in Q3-2021. Differences in the major categories include:

• Salary, commissions, and benefits expense decreased by $202thousand as a result of reduced headcount.

• Advertising expense decreased by $70 thousand as a result of virtually hosted tradeshows.

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• Selling and marketing expenses for Sonic Foundry International and Mediasite KK accounted for $190 thousand and $825 thousand respectively, an aggregate increase of $186 thousand from Q3-2020

YTD-2021 (nine months) compared to YTD-2020 (nine months)

Selling and marketing expenses decreased $668 thousand or 7% from $9.4 million in YTD-2020 to $8.8 million in YTD-2021.

Differences in the major categories include:

• Salary, commissions, and benefits expense decreased by $556 thousand as a result of reduced headcount.

• Travel expenses decreased $195 thousand primarily due to restrictions related to the pandemic.

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• Selling and marketing expenses for Sonic Foundry International and Mediasite KK accounted for $605 thousand and $2.3 million, respectively, an aggregate increase of $478 thousand from YTD-2020.

We anticipate selling and marketing headcount to remain consistent throughout the remainder of the fiscal year.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist of personnel and related costs associated with the facilities, finance, legal, human resource and information technology departments, as well as other expenses not fully allocated to functional areas.

Q3-2021 compared to Q3-2020

G&A expenses increased $73 thousand or 7% from $1,030 thousand  in Q3-2020 to $1,103 thousand in Q3-2021. Differences in the major categories include:

• Increase in compensation, benefits, and professional services of $298 thousand offset by $160 thousand rent credit and $97 thousand depreciation reclassed from G&A to COGS.

• G&A expenses for Sonic Foundry International and Mediasite KK accounted for $24 thousand and $196 thousand respectively, an aggregate increase of $23 thousand from Q3-2020.

YTD-2021 (nine months) compared to YTD-2020 (nine months)

G&A expenses decreased $291 thousand or 7.9% from $3.6 million in YTD-2020 to $3.3 million in YTD-2021. Differences in the major categories include:

• Decrease in professional fees and facilities $297 thousand offset by $596 thousand increase in compensation and benefits.

• G&A expenses for Sonic Foundry International and Mediasite KK accounted for $76 thousand and $566 thousand respectively, an aggregate decrease of $10 thousand from YTD-2020.

We anticipate G&A headcount to remain consistent throughout the remainder of the fiscal year.

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Product Development Expenses

Product development expenses include salaries and wages of the software research and development staff and an allocation of benefits, facility and administrative expenses.

Q3-2021 compared to Q3-2020

Product development expenses increased $372 thousand, or 25% from $1.5 million in Q3-2020 to $1.9 million in Q3-2021. Differences in the major categories include:

• Increase in compensation and benefits of $186 thousand as a result of additional headcount and outside product development resources and $142 thousand as a result of additional investment in product development research.

• Product development expense for Sonic Foundry International and Mediasite KK accounted for $118 thousand and $98 thousand respectively, an aggregate increase of $13 thousand compared to Q3-2020.

YTD-2021 (nine months) compared to YTD-2020 (nine months)

Product development expenses increased by $755 thousand, or 16% from $4.6 million in YTD -2020 to $5.4 million in YTD -2021. Differences in the major categories include:

• Increase in compensation and benefits of $410 thousand as a result of additional headcount and $181 thousand as a result of additional investment in product development research.

• Product development expense for Sonic Foundry International and Mediasite KK accounted for $326 thousand and $280 thousand respectively, an aggregate increase of $31 thousand compared to YTD-2020.

We anticipate product development headcount to remain consistent throughout the remainder of the fiscal year. We do not anticipate that any fiscal 2021 software development efforts will qualify for capitalization.

Other Income and Expense, Net

Interest income for the three months ended June 30, 2021 was $10 thousand. Interest expense for the nine months ended June 30, 2021 was $42 thousand. Interest expense was $140 thousand and $621 thousand for the same periods last year. The quarterly decrease over the prior year is a net effect of the PFG debt payoff and PPP Loan forgiveness. The Company also recorded $13 thousand and $54 thousand of interest expense, respectively, for the three and nine months ended June 30, 2021 related to the accretion of discounts on the PFG Loan and Warrant Debt compared to $14 thousand and $42 thousand for the three and nine months ended June 30, 2020. The Company also recorded amortization expense related to the back-end fee on the PFG loan of $6 thousand and $31, respectively, for the three and nine months ended June 30, 2021 compared to $13 thousand and $38 thousand for the same period last year. The Company also recorded zero interest expense during the three and nine months ended June 30, 2021 related to the accretion of discounts on the Burish notes payable compared to $16 thousand and $84 thousand, respectively, for the three and nine months ended June 30, 2020.

During the three and nine months ended June 30, 2021, a gain in fair value of $22 thousand and $3 thousand, respectively, was recorded related to the fair value remeasurement on the derivative liability associated with the Loan and Security Agreement and Warrant Debt with PFG compared to a loss in fair value of $52 thousand and $116 thousand during the three and nine months ended June 30, 2020. The fair value of the derivative liability is measured at fair value based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield. The Company also recorded a gain from debt forgiveness of $2.3 million from PPP Loan forgiveness in the three months ended June 30, 2021.

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Foreign Currency Translation Adjustment

The Company's wholly-owned subsidiaries operate in Japan and the Netherlands, and utilize the Japanese Yen and Euro, respectively, as their functional currency. Assets and liabilities of the Company's foreign operations are translated in US dollars at period end exchange rates while revenues and expenses are translated using average rates for the period. Gains and losses from the translation are deferred and included in accumulated other comprehensive loss in the consolidated statements of operations.

For the three and nine months ended June 30, 2021, the Company's foreign currency translation adjustment was a gain of $7 thousand and a loss of $120 thousand, respectively, compared to a gain of $15 thousand and gain of $12 thousand, respectively, for the three and nine months ended June 30, 2020.

During the three and nine months ended June 30, 2021, the Company recorded an aggregate transaction gain of $2 thousand and $26 thousand compared to an aggregate transaction loss of $56 and $34 thousand for the three and nine months ended June 30, 2020. The aggregate transaction gain or loss is included in the other expense line of the condensed consolidated statements of operations.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are its cash from operations and debt and equity financing. During the nine  months of fiscal 2021, the Company had used  $797 thousand cash for operating activities, compared with $1.2 million cash provided by operating activities in the same period of fiscal 2020. The primary factors effecting the $797 thousand cash used by operating activities are the $3.5 million net income, $375 thousand stock-based compensation, $712 thousand change in inventory, and $592 thousand change in accounts receivable partially offset by $2.0 million change in accounts payable, $2.3 million changes in unearned revenue, and $2.3 million PPP loan forgiveness.

Capital expenditures were $619 thousand in the first nine months of fiscal 2021 compared to $683 thousand in the same period in fiscal 2020.

The Company used $776 thousand of cash for financing activities during the first nine months of fiscal 2021. Payments on notes payable of $935 thousand were partially offset by proceeds from stock option exercises of $247 thousand. For the same period in fiscal 2020, the Company generated $1.7 million of cash from financing activities, primarily due to net proceeds from the disbursement of the Mediasite term note of $463 thousand and the PPP loan of $2.3 million. Proceeds were offset by payments of $984 thousand on existing debt.

At June 30, 2021, the Company had $552 thousand outstanding, net of warrant debt and debt discounts, related to notes payable with PFG V and the Mediasite KK term debt. During the current quarter, the Company paid off the PFG V debt.

At June 30, 2021, approximately $3.4 million of cash and cash equivalents was held by the Company’s foreign subsidiaries.

The Company believes its cash position plus available resources is adequate to accomplish its business plan through at least the next 12 months.

The Company completed a common stock issuance to certain investors totaling $3.5 million, net of $75 thousand expenses, on July 27, 2021. The proceeds of the stock issuance are intended to be satisfy the initial listing requirements of the Nasdaq Capital Market. Additionally, the Company signed a line of credit agreement on July 28, 2021, with US Bank for $3 million at an annual rate equal to 1.35% plus the greater of zero percent and the one month LIBOR rate. The Company will likely evaluate lease opportunities to finance equipment purchases in the future and support working capital needs. We may also seek additional equity financing but there are no assurances that these will be on terms acceptable to the Company.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from those reported in the Company’s Annual Report on Form 10-K for the year-ended September 30, 2020. At June 30, 2021, none of the Company’s $552 thousand in outstanding debt is variable rate, therefore, an increase in the level of interest rates would not have any material impact on our Consolidated Financial Statements. We monitor our positions with, and the credit quality of, the financial institutions that are party to any of our financial transactions.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on evaluations at June 30, 2021, our principal executive officer and principal financial officer, with the participation of our management team, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act). Disclosure controls and procedures ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that material information relating to the Company is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2021.

Changes in Internal Controls

During the period covered by the quarterly report on Form 10-Q, the Company has not made any changes to its internal control over financial reporting (as referred to in Paragraph 4(b) of the Certifications of the Company's principal executive officer and principal financial officer included as exhibits to the report) that have materially affected, or are reasonably likely to affect the Company's internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Form 10-K for the fiscal year ended September 30, 2020 filed with the SEC.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 6. EXHIBITS

NUMBER	DESCRIPTION
3.1	Articles of Amendment of Amended and Restated Articles of Incorporation, effective November 16, 2009, Amended and Restated Articles of Incorporation, effective January 26, 1998, and Articles of Amendment, effective April 9, 2000, filed as Exhibit No. 3.1 to the Annual Report on Form 10-K for the year ended September 30, 2009, and hereby incorporated by reference.
3.2	Articles Supplementary to the Company Charter of the Registrant, as relates to Series A Preferred Stock, dated May 30, 2017, filed as Exhibit 5.03 to the 8-K filed on June 5, 2017, and hereby incorporated by reference.
3.3	Articles Supplementary to the Company Charter of the Registrant, as relates to Series A Preferred Stock, dated November 6, 2017, filed as Exhibit 3.1 to the Form 8-K filed on November 21, 2017, and hereby incorporated by reference.
3.4	Amended and Restated By-Laws of the Registrant, filed as Exhibit No. 3.1 to the Form 8-K filed on January 25, 2018, and hereby incorporated by reference.
3.5	Articles Supplementary to the Company Charter of the Registrant, as relates to Series A Preferred Stock, filed as Exhibit 3.1 to the Form 8-K filed on May 23, 2018, and hereby incorporated by reference.
3.6	Article of Amendment to the Company Charter of the Registrant, filed herein.
4.1	Form of Warrant Agreement between registrant and four investors, dated July 20, 2021, filed as Exhibit 4.1 to the 8-K, filed on July 30, 2021 and here by incorporated by reference.
10.1*	Registrant’s 2008 Non-Employee Directors’ Stock Option Plan, as amended, filed as Exhibit 3 to the Form 14A filed on January 26, 2017, and hereby incorporated by reference.
10.2*	Registrant’s 2008 Employee Stock Purchase Plan, as amended, filed as Exhibit 1 to the Form 14A filed on January 26, 2017, and hereby incorporated by reference.
10.3*	Registrant’s 2009 Stock Incentive Plan, as amended, filed as Exhibit 2 to the Form 14A filed on January 26, 2017, and hereby incorporated by reference.
10.4	Lease Agreement between Registrant, as tenant, and West Washington Associates, LLC as landlord, dated June 28, 2011, filed as Exhibit 10.1 to the Form 8-K filed on July 1, 2011, and hereby incorporated by reference.
10.5*	Employment Agreement dated March 21, 2014 between Sonic Foundry, Inc. and Kenneth A. Minor, filed as Exhibit 10.2 to the Form 8-K filed on March 26, 2014, and hereby incorporated by reference.
10.6	Forms of Subscription Agreements, Lock-Up Agreements and Warrant Agreements dated December 22, 2014 among Sonic Foundry, Inc. and Mark Burish, and Sonic Foundry, Inc. and Andrew Burish, filed as Exhibits 10.1, 10.2, and 10.3 to the Form 8-K filed on December 30, 2014 and hereby incorporated by reference.
10.7	Lease Agreement between Sonic Foundry International, as tenant, and Prinsen Geerligs as landlord, dated February 1, 2014, filed as Exhibit 10.25 to the form 10-Q on February 6, 2015, and hereby incorporated by reference.
10.8	Loan and Security Agreement, dated May 13, 2015 among Registrant, Sonic Foundry, Inc. and Partners for Growth IV, L.P., filed as Exhibit 10.27 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
10.9	Warrant, dated as of May 13, 2015, between Registrant and Partners for Growth IV, L.P., filed as Exhibit 10.28 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
10.10	Warrant dated as of May 13, 2015, between Registrant and PFG Equity Investors, LLC, filed as Exhibit 10.30 to the form 10-Q filed on May 14, 2015, and hereby incorporated by reference.

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10.11	Intellectual Property Security Agreement, dated as of May 13, 2015, between Registrant and Partners for Growth IV, L.P., filed as Exhibit 10.31 to form 10-Q filed on May 14, 2015, and hereby incorporated by reference.
10.12	Modification No. 1 to Loan and Security Agreement, dated September 30, 2015 among Registrant, Sonic Foundry, Inc. and Partners for Growth IV, L.P., filed as Exhibit No. 10.2 to the Form 8-K filed on October 9, 2015, and hereby incorporated by reference.
10.13	Lease Agreement between Mediasite KK, as tenant, and Sumitomo Metal Mining Co., Ltd., as landlord, dated August 1, 2016, filed as Exhibit 10.1 to the Form 8-K filed on August 3, 2016, and hereby incorporated by reference.
10.14	Modification No. 2 to Loan and Security Agreement, dated February 8, 2017 among Registrant, Sonic Foundry, Inc. and Partners for Growth IV, L.P., filed as Exhibit 10.28 to the Form 10-Q filed on February 9, 2017, and hereby incorporated by reference.
10.15	Waiver and Modification No. 3 to Loan and Security Agreement, dated May 11, 2017 among Registrant Sonic Foundry, Inc. and Partners for Growth IV, L.P., filed as Exhibit 10.31 to the Form 10-Q filed on May 11, 2017, and hereby incorporated by reference.
10.16	Subscription Agreement between Registrant and Mark D. Burish, dated May 30, 2017, filed as Exhibit 3.02 to the 8-K filed on June 5, 2017, and hereby incorporated by reference.
10.17	Agreement Not to Convert between Registrant and Mark D. Burish, dated November 17, 2017, filed as Exhibit 10.1 to the Form 8-K filed on November 21, 2017, and hereby incorporated by reference.
10.18	Subscription Agreement between Registrant and Mark D. Burish, dated August 23, 2017, filed as Exhibit 10.1 to the Form 8-K filed on August 25, 2017, and hereby incorporated by reference.
10.19	Modification No. 4 to Loan and Security Agreement, dated December 28, 2017 among Registrant, Sonic Foundry, Inc. and Partners for Growth IV, L.P., filed as Exhibit 10.2 to the Form 8-K filed on December 29, 2017, and hereby incorporated by reference.
10.20	Subscription Agreement between Registrant and Mark D. Burish, dated January 19, 2018, filed as Exhibit 10.1 to the Form 8-K filed on January 25, 2018, and hereby incorporated by reference.
10.21	10.75% Convertible Secured Subordinated Promissory Note between Registrant and Mark D. Burish, filed as Exhibit 10.2 to the Form 8-K filed on January 25, 2018, and hereby incorporated by reference.
10.22	Subscription Agreement between Registrant and Andrew D. Burish, dated April 16, 2018, filed as Exhibit 10.1 to the Form 8-K filed on April 18, 2018 and hereby incorporated by reference.
10.23	Warrant, dated April 16, 2018, filed as Exhibit 10.2 to the Form 8-K filed on April 16, 2018, and hereby incorporated by reference.
10.24	Loan and Security Agreement, dated May 11, 2018 among Registrant, Sonic Foundry, Inc. and Partners for Growth V, L.P., filed as Exhibit 10.41 to the Form 10-Q filed on May 15, 2018, and hereby incorporated by reference.
10.25	Warrant, dated as of May 11, 2018, between Registrant and Partners for Growth V, L.P., filed as Exhibit 10.42 to the Form 10-Q filed on May 15, 2018, and hereby incorporated by reference.
10.26	Promissory Note between Registrant and Mark D. Burish, dated January 4, 2019, filed as Exhibit 10.1 to the Form 8-K filed on January 8, 2019, and hereby incorporated by reference.
10.27	Promissory Note between Registrant and Mark D. Burish, dated January 31, 2019, effective upon receipt of funds on February 5, 2019, filed as Exhibit 10.1 to the Form 8-K filed on February 12, 2019, and hereby incorporated by reference.
10.28	Promissory Note between Registrant and Mark D. Burish, dated February 14, 2019, filed as Exhibit 10.1 to the Form 8-K filed on February 20, 2019, and hereby incorporated by reference.
10.29	Note Purchase Agreement between the Company and Mark Burish, dated February 28, 2019, filed as Exhibit 10.1 to the Form 8-K filed on March 6, 2019, and hereby incorporated by reference.
10.30	Warrant between the Company and Mark Burish, dated February 28, 2019, filed as Exhibit 10.2 to the Form 8-K filed on March 6, 2019, and hereby incorporated by reference.
10.31	Consent, Waiver & Modification to Loan and Security Agreement between Sonic Foundry, Inc. and Partners for Growth V, L.P., dated March 11, 2019, filed as Exhibit 10.1 to the Form 8-K filed on March 12, 2019, and hereby incorporated by reference.
10.32	Employment Agreement dated April 22, 2019 between Sonic Foundry, Inc. and Michael Norregaard, filed as Exhibit 10.1 to the Form 8-K filed on April 24, 2019, and hereby incorporated by reference.
10.33	Retirement and Transition Agreement dated April 22, 2019 between Sonic Foundry, Inc. and Gary Weis, filed as Exhibit 10.2 to the Form 8-K filed on April 24, 2019, and hereby incorporated by reference.

33

10.34	Retirement and Transition Agreement dated August 5, 2019 between Sonic Foundry, Inc. and Kenneth Minor, filed as Exhibit 10.1 to the Form 8-K filed on August 9, 2019, and hereby incorporated by reference.
10.35	Amended and Restated Employment Agreement dated as of August 23, 2019 by and between Sonic Foundry, Inc. and Michael Norregaard, filed as Exhibit 10.1 to the Form 8-K filed on August 29, 2019, and hereby incorporated by reference.
10.36	Note Modification Agreement dated November 22, 2019 between Sonic Foundry, Inc. and Mark Burish, filed as Exhibit 10.36 to the Form 10-Q filed on February 13, 2020, and hereby incorporated by reference.
10.37	Lease Agreement between Mediasite KK, as tenant, and Sanji Kato, as landlord, dated November 2, 2019, filed with the March 31, 2020 Form 10-Q and hereby incorporated by reference.
10.38	Lease Agreement between Mediasite KK, as tenant, and Maida Housing Corporation, as landlord, dated April 1, 2014, filed with the March 31, 2020 Form 10-Q and hereby incorporated by reference.
10.39	Term Loan Agreement dated January 30, 2020 between Mediasite KK and Sumitomo Mitsui Banking, filed with the March 31, 2020 Form 10-Q and hereby incorporated by reference.
10.40	First Amendment to Note Modification Agreement dated March 24, 2020 between Sonic Foundry, Inc. and Mark Burish, filed with the March 31, 2020 Form 10-Q and hereby incorporated by reference.
10.41	Term Loan Agreement dated April 20, 2020 between Sonic Foundry, Inc. and First Business bank, filed as Exhibit 10.1 to the Form 8-K filed on April 23, 2020 and hereby incorporated by reference.
10.42	Debt Conversion Agreement dated May 13, 2020 between Sonic Foundry, Inc. and Mark Burish, filed with the March 31, 2020 Form 10-Q and hereby incorporated by reference.
10.43	Employment Agreement dated October 8, 2020 between Sonic Foundry, Inc. and Kelsy Boyd, filed as Exhibit 10.1 to the Form 8-K filed on October 15, 2020, and hereby incorporated by reference.
10.44	Employment Agreement dated October 20, 2020 between Sonic Foundry, Inc. and Joseph Mozden, Jr., filed as Exhibit 10.1 to the Form 8-K filed on October 22, 2020, and hereby incorporated by reference.
10.45	Engagement Letter dated as of February 25, 2021 by and between Sonic Foundry, Inc. and Kenneth Minor, filed as Exhibit 10.1 to the Form 8-K filed on March 1, 2021, and hereby incorporated by reference.
10.46	Retirement Transition Agreement dated February 25, 2021 between Sonic Foundry, Inc. and Kelsy Boyd.
10.47	Form of Registration Right Agreement between Registrant and four investor, dated July 20, 2021, filed as Exhibit 10 to the Form 8-K filed on July 30, 2021, and hereby incorporated by reference.
10.48	Revolving Credit Agreement, dated July 28, 2021, between Registrant and U.S. Bank National Association, filed as Exhibit 10.48 to the Form 8-K filed on August 3, 2021, and hereby incorporated by reference.
10.49	Lease Agreement between Registrant, as tenant, and West Washington Associates, LLC as landlord, dated June 15, 2021, filed herein.
31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32	Section 906 Certification of Chief Executive Officer and Chief Financial Officer
101	The following materials from the Sonic Foundry, Inc. Form 10-Q for the quarter ended June 30, 2021 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statement of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Stockholders' Deficit, (v) the Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

Registrant will furnish upon request to the Securities and Exchange Commission a copy of all exhibits, annexes and schedules attached to each contract referenced in item 10.

* Compensatory Plan or Arrangement

34

SIGNATURES

Pursuant to the requirement 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 12, 2021	By:	/s/ Joe Mozden, Jr.
		Joe Mozden, Jr.
		Chief Executive Officer
August 12, 2021	By:	/s/ Ken Minor
		Ken Minor
		Interim Chief Financial Officer

35

EX-3.6

Exhibit 3.6

EX-10.49

Exhibit 10.49

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Joe Mozden, Jr., the CEO of Sonic Foundry, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sonic Foundry, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 12, 2021

By:	/s/ Joe Mozden, Jr.
By:	Joe Mozden, Jr.
Title:	CEO

EX-31.2

Exhibit 31.2

I, Ken Minor, the Interim CFO of Sonic Foundry, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sonic Foundry, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 12, 2021

By:	/s/ Ken Minor
By:	Ken Minor
Title:	Interim Chief Financial Officer

EX-32

SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

Exhibit 32

Statement

Solely for the purposes of complying with 18 U.S.C.§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and the Chief Financial Officer of Sonic Foundry, Inc. (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 12, 2021

By:	/s/ Joe Mozden, Jr.
By:	Joe Mozden, Jr.
Title:	Chief Executive Officer
By:	/s/ Ken Minor
By:	Ken Minor
Title:	Interim Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2021	Jul. 31, 2021
Document Information [Line Items]
Entity Central Index Key	0001029744
Entity Registrant Name	SONIC FOUNDRY INC
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	000-30407
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	39-1783372
Entity Address, Address Line One	222 West Washington Ave
Entity Address, City or Town	Madison
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53703
City Area Code	608
Local Phone Number	443-1600
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $0.01 par value
Entity Common Stock, Shares Outstanding		9,033,277

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Current assets:
Cash and cash equivalents	$ 5,445	$ 7,619
Accounts receivable, net of allowances of $236 and $159	5,448	6,250
Inventories	449	1,167
Investment in sales-type lease, current	148	275
Capitalized commissions, current	300	440
Prepaid expenses and other current assets	930	1,065
Total current assets	12,720	16,816
Property and equipment:
Leasehold improvements	1,113	1,128
Computer equipment	8,377	7,960
Furniture and fixtures	1,549	1,366
Total property and equipment	11,039	10,454
Less accumulated depreciation and amortization	8,066	7,295
Property and equipment, net	2,973	3,159
Other assets:
Investment in sales-type lease, long-term	189	76
Capitalized commissions, long-term	69	100
Right-of-use assets under operating leases	2,853	2,081
Other long-term assets	769	397
Total assets	19,573	22,629
Current liabilities:
Accounts payable	724	2,689
Accrued liabilities	2,387	2,565
Current portion of unearned revenue	7,947	10,402
Current portion of finance lease obligations	83	119
Current portion of operating lease obligations	1,150	1,425
Current portion of notes payable and warrant debt, net of discounts	0	1,104
Total current liabilities	12,291	18,304
Long-term portion of unearned revenue	1,850	1,736
Long-term portion of finance lease obligations	26	89
Long-term portion of operating lease obligations	1,721	665
Long-term portion of notes payable and warrant debt, net of discounts	552	2,673
Derivative liability, at fair value	63	66
Other liabilities	31	144
Total liabilities	16,534	23,677
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock	0	0
Common stock, $.01 par value, authorized 10,000,000 shares; 8,104,185 and 7,965,325 shares issued, respectively and 8,086,331 and 7,952,609 shares outstanding, respectively	81	80
Additional paid-in capital	209,693	209,022
Accumulated deficit	(205,984)	(209,519)
Accumulated other comprehensive loss	(582)	(462)
Treasury stock, at cost, 12,716 shares.	(169)	(169)
Total stockholders’ equity (deficit)	3,039	(1,048)
Total liabilities and stockholders’ equity (deficit)	19,573	22,629
Series A Preferred Stock [Member]
Stockholders’ equity (deficit):
Preferred stock	0	0
Series B Preferred Stock [Member]
Stockholders’ equity (deficit):
Preferred stock	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Accounts receivable, allowances	$ 236	$ 159
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	8,104,185	7,965,325
Common stock, shares outstanding (in shares)	8,086,331	7,952,609
Treasury stock, shares (in shares)	12,716	12,716
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	4,500	4,500
Preferred stock, shares issued (in shares)	0	0
Preferred stock, liquidation preference (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares outstanding (in shares)	0	0
Preferred stock, dividend rate	9.00%	9.00%
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, liquidation preference (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, dividend rate	5.00%	5.00%

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue:
Revenue	$ 8,661	$ 7,917	$ 26,537	$ 24,599
Cost of revenue:
Cost of revenue	2,622	2,170	7,608	6,754
Gross margin	6,039	5,747	18,929	17,845
Operating expenses:
Selling and marketing	2,860	2,980	8,765	9,433
General and administrative	1,103	1,030	3,356	3,647
Product development	1,883	1,511	5,355	4,600
Total operating expenses	5,846	5,521	17,476	17,680
Income from operations	193	226	1,453	165
Non-operating income(expenes):
Interest expense, net	10	(140)	(42)	(621)
Other expense, net	19	(106)	(8)	(150)
Gain on debt forgiveness	2,325	0	2,325	0
Total non-operating income ( expenses)	2,354	(246)	2,275	(771)
Income (loss) before income taxes	2,547	(20)	3,728	(606)
Income tax benefit (expense)	99	127	(193)	(12)
Net income (loss)	2,646	107	3,535	(618)
Dividends on preferred stock	0	0	0	0
Net income (loss) attributable to common stockholders	$ 2,646	$ 107	$ 3,535	$ (618)
Income (loss) per common share
– basic (in dollars per share)	$ 0.33	$ 0.01	$ 0.44	$ (0.09)
– diluted (in dollars per share)	$ 0.31	$ 0.01	$ 0.42	$ (0.09)
Weighted average common shares
– basic (in shares)	8,060,036	7,399,545	8,021,852	6,972,924
– diluted (in shares)	8,545,156	7,830,293	8,480,856	6,972,924
Product and Other [Member]
Revenue:
Revenue	$ 2,659	$ 2,744	$ 7,406	$ 7,612
Cost of revenue:
Cost of revenue	1,074	1,199	2,838	3,188
Service [Member]
Revenue:
Revenue	6,002	5,173	19,131	16,987
Cost of revenue:
Cost of revenue	$ 1,548	$ 971	$ 4,770	$ 3,566

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Net income (loss)	$ 2,646	$ 107	$ 3,535	$ (618)
Other comprehensive income (loss)
Foreign currency translation adjustment	7	15	(120)	12
Comprehensive income (loss)	$ 2,653	$ 122	$ 3,415	$ (606)

XML

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Total
Balance at Sep. 30, 2019	$ 0	$ 67	$ 203,735	$ (209,340)	$ (546)	$ (169)	$ (6,253)
Stock compensation	0	0	104	0	0	0	104
Issuance of common stock	0	1	81	0	0	0	82
Conversion of related-party debt to common stock	0	11	4,994	0	0	0	5,005
Foreign currency translation adjustment	0	0	0	0	12	0	12
Net Income (loss)	0	0	0	(618)	0	0	(618)
Balance at Jun. 30, 2020	0	79	208,914	(209,958)	(534)	(169)	(1,668)
Balance at Mar. 31, 2020	0	68	203,884	(210,065)	(549)	(169)	(6,831)
Stock compensation	0	0	18	0	0	0	18
Issuance of common stock	0	0	18	0	0	0	18
Conversion of related-party debt to common stock	0	11	4,994	0	0	0	5,005
Foreign currency translation adjustment	0	0	0	0	15	0	15
Net Income (loss)	0	0	0	107	0	0	107
Balance at Jun. 30, 2020	0	79	208,914	(209,958)	(534)	(169)	(1,668)
Balance at Sep. 30, 2020	0	80	209,022	(209,519)	(462)	(169)	(1,048)
Stock compensation	0	0	375	0	0	0	365
Issuance of common stock	0	1	296	0	0	0	297
Foreign currency translation adjustment	0	0	0	0	(120)	0	(120)
Net Income (loss)	0	0	0	3,535	0	0	3,535
Balance at Jun. 30, 2021	0	81	209,693	(205,984)	(582)	(169)	3,039
Balance at Mar. 31, 2021	0	81	209,523	(208,630)	(589)	(169)	216
Stock compensation	0	0	92	0	0	0	82
Issuance of common stock	0	0	78	0	0	0	78
Foreign currency translation adjustment	0	0	0	0	7	0	7
Net Income (loss)	0	0	0	2,646	0	0	2,646
Balance at Jun. 30, 2021	$ 0	$ 81	$ 209,693	$ (205,984)	$ (582)	$ (169)	$ 3,039

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating activities
Net income (loss)	$ 3,535	$ (618)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of other intangible	42	204
Depreciation and amortization of property and equipment	773	644
Loss on sale of fixed assets	6	0
Provision for doubtful accounts - including financing receivables	0	31
Provision for inventory reserve	0	90
Loss on conversion of related party debt to equity	0	26
Stock-based compensation expense related to stock options and warrants	375	104
Stock issued for board of director fees	40	61
Deferred loan interest to related party	0	322
Remeasurement loss (gain) on derivative liability	(3)	116
Gain on debt forgiveness	(2,325)	0
Changes in operating assets and liabilities:
Accounts receivable	592	1,077
Inventories	712	(76)
Investment in sales-type lease	1	136
Capitalized commissions	171	127
Prepaid expenses and other current assets	114	(128)
Right-of-use assets under operating leases	(792)	208
Operating lease obligations	795	(234)
Other long-term assets	(395)	(24)
Accounts payable and accrued liabilities	(2,042)	(749)
Other long-term liabilities	(106)	(2)
Unearned revenue	(2,290)	(153)
Net cash (used in) provided by operating activities	(797)	1,162
Investing activities
Purchases of property and equipment	(619)	(683)
Net cash used in investing activities	(619)	(683)
Financing activities
Proceeds from notes payable	0	2,778
Payments on notes payable		(984)
Proceeds from issuance of common stock	10	2
Proceeds from exercise of common stock options	247	18
Payments on finance lease obligations	(98)	(162)
Net cash (used in)provided by financing activities	(776)	1,652
Changes in cash and cash equivalents due to changes in foreign currency	18	16
Net (decrease) increase in cash and cash equivalents	(2,174)	2,147
Cash and cash equivalents at beginning of year	7,619	4,295
Cash and cash equivalents at end of period	5,445	6,442
Supplemental cash flow information:
Interest paid	32	114
Income taxes paid, foreign	84	141
Non-cash financing and investing activities:
Property and equipment financed by finance lease or accounts payable	0	478
Conversion of related party debt to common shares	$ 0	$ 5,005

XML

Note 1 - Basis of Presentation and Significant Accounting Policies

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

1. Basis of Presentation and Significant Accounting Policies

Financial Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared on a basis substantially consistent with the Company's audited financial statements as of and for the year ended September 30, 2020 included in the Company's Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended June 30, 2021 are not necessarily indicative of the results that might be expected for the year ending September 30, 2020. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

Impacts of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.  While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration, severity and impact of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as those of our key business partners, vendors and other counterparties for an indefinite period of time.  To support the health and well-being of our employees, business partners and communities, a vast majority of our employees have been working remotely since mid- March 2020 and continue to do so. The Company continues to follow guidelines outlined by the CDC and local county protocol. On August 2, 2021, the Company returned to in-person working. . The Company will implement a newly developed hybrid module to allow employees to work 60% in office and 40% from home.

COVID-19 has had negative impacts on our operations and the future impacts of the pandemic and any corresponding economic results are largely unknown and rapidly evolving.  Beginning in March 2020, the in-person events portion of our business was, and continues to be, significantly impacted by cancellations and/or postponements due to social distancing protocols enacted to stop the spread of the virus.  In response to the cancellations, the Company introduced a new virtual events platform as an alternate solution for our customers. While a return to in-person events and conferences was anticipated to begin during the summer of 2021, a full return is not anticipated until 2022. In addition, the Company is confident many future in-person events will be hybrid and will include our virtual events platform. 

Restructuring and exit activities

The determination of when the Company accrues for involuntary termination benefits under restructuring plans depends on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement. The Company accounts for on-going benefit arrangements, such as those documented by employment agreements, in accordance with Accounting Standards Codification 712 ("ASC 712") Nonretirement Postemployment Benefits. Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations. When applicable, the Company records such costs into operating expense.

For the three and nine months ended June 30, 2021, the Company expensed involuntary termination benefits of $56 and $157 thousand under ASC 420 compared to zero during the same periods last year.

Investment in Sales-Type Lease

The Company has entered into sales-type lease arrangements with certain customers, consisting of recorders leased with terms ranging from 3-5 years.

Investment in sales-type leases consists of the following (in thousands) as of June 30, 2021:

Investment in sales-type lease, gross:
2021	$	93
2022		116
2023		43
2024		43
2025		43
Gross investment in sales-type lease		338
Less: Unearned income		1
Total investment in sales-type lease	$	337
Current portion of total investment in sales-type lease	$	148
Long-term portion of total investment in sales-type lease		189
	$	337

Inventory

Inventory consists of raw materials and supplies used in the assembly of Mediasite recorders and finished units. Inventory of completed units and spare parts are carried at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. An obsolescence reserve has been established to account for slow moving inventory.

Inventory consists of the following (in thousands):

	June 30,			September 30,
	2021			2020
Raw materials and supplies	$	171		$	267
Finished goods		400			1,022
Less: Obsolescence reserve		(122	)		(122	)
	$	449		$	1,167

Asset Retirement Obligation

An asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset is recognized as a liability in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of the related long-term asset.  The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset.  As of  June 30, 2021 and September 30, 2020, the Company has recorded a liability of $127 thousand and $134 thousand, respectively, for retirement obligations associated with returning the MSKK leased property to the respective lessors upon the termination of the lease arrangement. Asset retirement obligations are included in other-long term liabilities on the condensed consolidated balance sheets.

Fair Value of Financial Instruments

In determining the fair value of financial assets and liabilities, the Company currently utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market, and adjusts for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible to the Company at the measurement date.

Level 2 Inputs: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3.

Financial Liabilities Measured at Fair Value on Recurring Basis

The fair value of the bifurcated conversion feature represented by the warrant derivative liability associated with the PFG debt is measured at fair value on a recurring basis based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described for share-based compensation which were generally observable (Level 2).

Financial liabilities measured at fair value on a recurring basis are summarized below (in thousands):

June 30, 2021	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	63	$	—	$	63

September 30, 2020	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	66	$	—	$	66

The gain or loss related to the fair value remeasurement on the derivative liability is included in the other expense line on the condensed consolidated statements of operations.

Financial Liabilities Measured at Fair Value on a Non-Recurring Basis

The initial fair values of PFG debt and warrant debt (see Note 4) were based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3). 

The Mr. Mark D. Burish ("Mr. Burish") warrant was measured at fair value using a Black Scholes model and the remaining fair value was allocated to the related Mr. Burish note purchase agreement (see Note 4) which management believes materially approximated the fair value based on calculating the present value of expected future cash flows (Level 3). The non-recurring fair value measurements were performed as of the date of issuance of the note purchase agreement and warrant. The discount was being amortized over the life of the related debt until May 2020, at which time the debt was extinguished and exchanged for the Company's common stock.

Financial Instruments Not Measured at Fair Value

The Company's other financial instruments consist primarily of cash and cash equivalents, accounts receivable, investment in sales-type lease, accounts payable, debt instruments and capital lease obligations. The book values of cash and cash equivalents, accounts receivable, investment in sales-type lease, and accounts payable are considered to be representative of their respective fair values due their short term nature. The carrying value of debt, including the current portion, approximates fair market value as the variable and fixed rate approximates the current market rate of interest available to the Company.

Legal Contingencies

When legal proceedings are brought or claims are made against the Company and the outcome is uncertain, we are required to determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings.

No legal contingencies were recorded or were required to be disclosed for the three or nine months ended June 30, 2021 or 2020.

Stock Based Compensation

The Company uses a lattice valuation model to account for all employee stock options granted. The lattice valuation model is a more flexible analysis to value options because of its ability to incorporate inputs that change over time, such as actual exercise behavior of option holders. The Company uses historical data to estimate the option exercise and employee departure behavior in the lattice valuation model. Expected volatility is based on historical volatility of the Company’s stock. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods the options are expected to be outstanding is based on the U.S. Treasury yields in effect at the time of grant. Forfeitures are based on actual behavior patterns. The expected exercise factor and forfeiture rates are calculated using historical exercise and forfeiture activity for the previous three years.

The fair value of each option grant is estimated using the assumptions in the following table:

	Nine Months Ended
	June 30,
	2021	2020
Expected life	4.3-4.7 years	4.5 years
Risk-free interest rate	0.33% - 0.58%	1.14% - 1.63%
Expected volatility	65.23% - 83.29%	72.40% - 73.46%
Expected forfeiture rate	14.18% -16.41%	15.05% - 15.38%
Expected exercise factor	1.2	1.2
Expected dividend yield	0%	0%

A summary of option activity at June 30, 2021 and changes during the nine months then ended is presented below:

				Weighted-		Weighted-Average
				Average		Remaining Contractual
	Options			Exercise Price		Period in Years
Outstanding at October 1, 2020		1,707,515,		$	5.08		4.6
Granted		564,967			3.40		9.8
Exercised		(119,902	)		2.22		0.0
Forfeited		(271,060	)		7.16		0.0
Outstanding at June 30, 2021		1,881,520			4.46		6.4
Exercisable at June 30, 2021		1,289,896			5.14		5.2

A summary of the status of the Company’s non-vested options and changes during the nine month period ended June 30, 2021 is presented below:

				Weighted-Average
				Grant Date Fair
Non-vested Options	Options			Value
Non-vested at October 1, 2020		339,897		$	0.60
Granted		564,967			1.58
Vested		(265,826	)		0.89
Forfeited		(47,414	)		1.15
Non-vested at June 30, 2021		591,623		$	1.38

The weighted average grant date fair value of options granted during the nine months ended June 30, 2021 was $1.58. As of June 30, 2021, there was $557 thousand of total unrecognized compensation cost related to non-vested stock-based compensation, with total forfeiture adjusted unrecognized compensation cost of $408 thousand. The cost is expected to be recognized over a weighted-average remaining life of 4.3 years.

Stock-based compensation recorded in the three and nine months ended June 30, 2021 was $82 thousand and $365 thousand, respectively. Stock-based compensation recorded in the three and nine months ended June 30, 2020 was $18 thousand and $104 thousand, respectively. There was $59 thousand and $247 thousand in cash received from transactions under all stock option plans during the three and nine months ended June 30, 2021 and $18 thousand and $18 thousand during the same period of the three and nine months ended June 30, 2020. There were no tax benefits realized for tax deductions from option exercises in either of the three and nine month periods ended June 30, 2021 or 2020. The Company currently expects to satisfy share-based awards with registered shares available to be issued.

The Company also has an Employee Stock Purchase Plan ("Purchase Plan") under which an aggregate of 300,000 common shares may be issued. The board passed a resolution in December 2020 to increase the share count by an additional 100,000 shares, which was approved by common stockholders in January 2021. A total of 99,667 shares are available to be issued under the plan at  June 30, 2021. The Company recorded stock compensation expense under this plan of $1 thousand and $6 thousand for the for the three and nine month periods ended June 30, 2021 and less than $1 thousand and $2 thousand for the three and nine month periods ended June 30, 2020.

Preferred Stock and Dividends

No shares of Preferred Stock, Series A were issued and outstanding as of June 30, 2021 and 2020.

Per Share Computation

Basic earnings (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares that may be repurchased, and excludes any dilutive effects of options and warrants. In periods where the Company reports net income, diluted net income per share is computed using common equivalent shares related to outstanding options and warrants to purchase common stock. The numerator for the calculation of basic and diluted earnings per share is net income (loss) attributable to common stockholders. The following table sets forth the computation of basic and diluted weighted average shares used in the earnings per share calculations:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Denominator for basic net income (loss) per share - weighted average common shares		8,060,036		7,399,545		8,021,852		6,972,924
Effect of dilutive options and warrants (treasury method)		485,120		430,748		459,004		—
Denominator for diluted net income (loss) per share - adjusted weighted average common shares		8,545,156		7,830,293		8,480, 856		6,972,924
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net loss per share because they are antidilutive		1,078,832		1,630,706		1,291,332		2,061,454

The Company issued 945,946 shares on July 27, 2021 in conjunction with an equity raise (see Note 7). If these shares were issued at the end of the reporting period, it would materially change the number of common shares outstanding.

Liquidity

At June 30, 2021, approximately $3.4 million of cash and cash equivalents was held by the Company's foreign subsidiaries.

The Company believes its cash position plus available resources is adequate to accomplish its business plan through at least the next 12 months. The Company completed a common stock issuance to certain investors totaling $3.5 million, net of $75 thousand expenses, on July 27, 2021. The proceeds of the stock issuance are intended to satisfy the initial listing requirements of the Nasdaq Capital Market. Additionally, the Company signed a line of credit agreement on July 28, 2021, with US Bank for $3 million at an annual rate equal to 1.35% plus the greater of zero percent and the one month LIBOR rate. The Company will likely evaluate lease opportunities to finance equipment purchases in the future and support working capital needs as well as seek additional equity financing opportunities. However, there are no assurances that these will be on terms acceptable to the Company.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", ("ASU 2019-12"). The amendments in this ASU affect entities within the scope of Topic 740. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for public entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. An entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the guidance and its impact to the financial statements.

Accounting standards that have been issued but are not yet effective by the FASB or other standards-setting bodies that do not require adoption until a future date, which are not discussed above, are not expected to have a material impact on the Company’s financial statements upon adoption.

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Note 2 - Related Party Transactions

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

2. Related Party Transactions

During the three and nine months ended June 30, 2021, the Company incurred fees of $30 thousand and $91 thousand, respectively, to a law firm, a partner of which is a director and stockholder of the Company. The Company incurred similar fees of $112 thousand and $372 thousand during the three and nine months ended June 30, 2020. The Company had recorded liabilities of $18 thousand and $7 thousand for unbilled services to the same law firm at June 30, 2021 and September 30, 2020, respectively.

On May 13, 2020, the Company entered into a debt conversion agreement with Mr. Burish to convert all outstanding debt owed to Mr. Burish into common stock at a conversion price of $5.00 per share. The total debt amount, including accrued interest and fees, of $5.6 million was converted into 1,114,723 shares of common stock. The transaction was recommended by the Company's Special Committee of Independent and Disinterested Directors, unanimously approved by all disinterested directors of the Company, and ratified by shareholders at the Company's most recent shareholder meeting. Silverwood Partners, the Special Committee's financial advisor, issued a fairness opinion in connection with the transaction. The debt conversion was also ratified by the shareholders at the annual shareholders meeting held on January 28, 2021.

Mr. Burish beneficially owns more than 5% of the Company’s common stock. Mr. Burish also serves as the Chairman of the Board of Directors. An affiliated party beneficially owns more than 5% of the Company's common stock. All transactions with Mr. Burish and with the affiliated party were approved by a Special Committee of Disinterested and Independent Directors.

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Note 3 - Commitments

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Commitments Disclosure [Text Block]

3. Commitments

Inventory Purchase Commitments

The Company enters into unconditional purchase commitments on a regular basis for the supply of Mediasite product for hardware inventory, as well as services to support our hosting environment, which are not recorded on the Company's condensed consolidated balance sheet. At June 30, 2021, the Company had an obligation to purchase $529 thousand of Mediasite product and $62 thousand of services during the remainder of fiscal 2021, and of services $423 thousand during fiscal 2022 and 2023.

Leases

The Company has operating leases for corporate office space with various expiration dates. Our leases have remaining lease terms of up to three years, some of which include escalation clauses, renewal options for up to twelve years or termination options within one year.

We determine if an arrangement is a lease upon contract inception. The Company has both operating and finance leases. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments according to the arrangement.

A contract contains a lease if the contract conveys the right to control the use of the identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms.

Lease right-of-use assets and lease liabilities are recognized as of the commencement date based on the present value of the lease payments over the lease term. The lease right-of use asset is reduced for tenant incentives and includes any initial direct costs incurred. We use the implicit interest rate when it is readily determinable. Otherwise, the present value of future minimum lease payments is determined using the Company's incremental borrowing rate. The incremental borrowing rate is based on the interest rate of the Company's most recent borrowing.

The lease term we use for the valuation of our right-of-use assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense is recognized on a straight-line basis over the expected lease term for operating leases. Amortization expense of the right-of-use asset for finance leases is recognized on a straight-line basis over the lease term and interest expense for finance leases is recognized based on the incremental interest rate.

Right-of-use assets and lease liabilities are recognized for our leases. Right-of-use assets under finance leases are included in property and equipment on the condensed consolidated balance sheets and have a net carrying value of $191 thousand at September 30, 2020 and $93 thousand at June 30, 2021.

We have operating lease arrangements with lease and non-lease components. The non-lease components in our arrangements are not significant when compared to the lease components. For all operating leases, we account for the lease and non-lease components as a single component. In June 2021, the landlord approved and granted the COVID landlord rent credit requested by the Company for the current lease ending December 31, 2021. The landlord granted a monthly rent credit of $53 thousand for the period of April 1, 2021 to September 30, 2021. The company elected to treat the rent credit as variable lease payments for the periods effected.

Effective June 2021, the Company renewed its building leases with a two and half year term starting January 1, 2022. Monthly rent payments will be $56 thousand in year 1 and increase annually at an escalation rate of 4.30% in year 2 and 3.30% in year 3. The Company has the option to renew for an additional 3 year term, but has elected to exclude the optional renewal period from the ROU asset and lease liability due to uncertainty of the likelihood of renewal at this time.

As of June 30, 2021, future maturities of operating and finance lease liabilities for the fiscal years ended September 30 are as follows (in thousands):

	Operating Leases			Finance Leases
2021 (remaining)	$	380		$	23
2022		1,007			79
2023		865			7
2024		700			5
2025		34			—
Thereafter		65			—
Total		3,051			114
Less: imputed interest		(180	)		(5	)
Total	$	2,871		$	109

Supplemental information related to leases is as follows (in thousands, except lease term and discount rate):

	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Operating lease costs	$	1,107	$	990
Variable operating lease costs		(110)		22
Total operating lease cost	$	997	$	1,012
Finance lease cost:
Amortization of right-of-use assets	$	47	$	147
Interest on lease liabilities		8		17
Total finance lease cost	$	55	$	164

Variable lease costs include operating costs for U.S. office lease based on square footage and Consumer Price Index ("CPI") rent escalation and related VAT for office lease in the Netherlands, and COVID-19 rent credit.

Supplemental cash flow information related to operating and finance leases were as follows (in thousands):

	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	956	$	1,016
Operating cash outflows for finance leases		8		17
Financing cash outflows for finance leases		98		162

Other information related to leases was as follows:

	June 30, 2021			June 30, 2020
Weighted average remaining lease term (in years)
Operating leases		3.0			2.4
Finance leases		1.5			2.2
Weighted average discount rate
Operating leases		4.00	%		9.54	%
Finance leases		7.28	%		7.22	%

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Note 4 - Credit Arrangements

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

4. Credit Arrangements

Partners for Growth V, L.P.

On May 11, 2018, Sonic Foundry, Inc., entered into a Loan and Security Agreement (the “2018 Loan and Security Agreement”) with Partners for Growth V, L.P. (“PFG V”).

The 2018 Loan and Security Agreement provides for a Term Loan ("Term Loan") in the amount of $2,500,000, which was disbursed in two (2) Tranches as follows: Tranche 1 was disbursed on May 14, 2018 in the amount of $2,000,000; and Tranche 2 in the amount of $500,000, was disbursed on November 8, 2018. Each tranche of the Term Loan bears interest at 10.75% per annum. Tranche 1 of the Term Loan is payable interest only until November 30, 2018. Thereafter, principal is due in 30 equal monthly principal installments, plus accrued interest, beginning December 1, 2018 and continuing until  May 1, 2021, when the principal balance is to be paid in full. Tranche 2 of the Term Loan is payable using the same repayment schedule as Tranche 1. Upon maturity, Sonic Foundry is required to pay PFG V a cash fee of $150,000. The principal of the Term Loan may be prepaid at any time without penalty as of May 14, 2019. The Term Loan is collateralized by substantially all the Company’s assets, including intellectual property.

Coincident with execution of the 2018 Loan and Security Agreement, the Company entered into a Warrant Agreement (“Warrant”) with PFG V. Pursuant to the terms of the Warrant, the Company issued to PFG V a warrant to purchase up to 66,000 shares of common stock of the Company at an exercise price of $2.57 per share, subject to certain adjustments. Pursuant to the Warrant, PFG V is also entitled, under certain conditions, to require the Company to exchange the Warrant for the sum of $250,000. All warrants issued in connection with PFG V expire on May 11, 2023.

At  June 30, 2021, and September 30, 2020, the estimated fair value of the derivative liability associated with the warrants issued in connection with the 2018 Loan and Security Agreement, was $63 thousand and $66 thousand, respectively. Included in other expense, the remeasurement gain on the derivative liability during the three and nine months ended June 30, 2021 was $22 thousand and $3 thousand, respectively, compared to remeasurement loss of $52 thousand and $116 thousand, respectively, during the three and nine months ended June 30, 2020.

The proceeds from the 2018 Loan and Security Agreement were allocated between the PFG V Debt and the Warrant Debt (inclusive of its conversion feature) based on their relative fair value on the date of issuance which resulted in carrying values of $2.3 million and $156 thousand, respectively. The warrant debt is treated together as a debt discount on the PFG V Debt and is being accreted to interest expense under the effective interest method over the three-year term of the PFG V Debt and the five-year term of the Warrant Debt. The Company recorded accretion of discount expense associated with the warrants issued with the PFG V loan of $4 thousand and $7 thousand for the three and nine months ended June 30, 2021, respectively, compared to $6 thousand and $17 thousand in the same periods last year.

In addition, $6 thousand and $34 thousand of amortization of the debt discount was recorded for the three and nine months ended June 30, 2021, respectively, compared to$14 thousand and $42 thousand in the same periods last year. At  June 30, 2021, the PFG V Debt fully matured and the carrying value of the Warrant Debt (inclusive of its conversion feature)  was $191 thousand. In addition, the Company paid PFG V a cash fee of $150,000 at the time of maturity (the “back-end fee”). During the three and nine months ended June 30, 2021 the Company recorded interest expense associated with recognition of the back-end fee of $6 thousand and $31 thousand, respectively, compared to $13 thousand and $38 thousand in the same periods last year.

The non-cash effective interest expense is calculated on the net balance of the PFG V Debt, debt discount, back-end fee and related loan origination fees, on a monthly basis. During the three and nine months ended June 30, 2021, non-cash interest expense of $11 thousand and $53 thousand was recorded compared to $7 and $3, respectively, during the same periods last year.

At June 30, 2021, a gross balance of $0 thousand was outstanding on the term debt with PFG V. At September 30, 2020, a gross balance of $667 thousand was outstanding with PFG V.

Initial Notes of the February 28, 2019 Note Purchase Agreement

On January 4, 2019, Sonic Foundry, Inc. and Mr. Burish entered into a Promissory Note (the "Promissory Note") pursuant to which Mr. Burish purchased a 9.25% Unsecured Promissory Note for $1,000,000 in cash. Interest accrued and outstanding principal on the Promissory Note was due and payable on January 4, 2020. The Promissory Note may be prepaid at any time without penalty. The Promissory Note was later included in the Note Purchase Agreement, dated February 28, 2019, as detailed below.

On January 31, 2019, Sonic Foundry, Inc. and Mr. Burish entered into a Promissory Note (the "January 31, 2019 Promissory Note") pursuant to which Mr. Burish purchased a 9.25% Unsecured Promissory Note for $1,000,000 in cash. Interest accrued and outstanding principal on the January 31, 2019 Promissory Note was due and payable on January 31, 2020. The January 31, 2019 Promissory Note may be prepaid any time without penalty. The note may be paid by the Company by issuing common stock to Mr. Burish, with each share valued at $1.30 per share. The January 31, 2019 Promissory Note was later included in the Note Purchase Agreement, dated February 28, 2019, as detailed below.

On February 14, 2019, Sonic Foundry, Inc. and Mr. Burish entered into a Promissory Note (the "February 14, 2019 Promissory Note") pursuant to which Mr. Burish purchased a 9.25% Unsecured Promissory Note for $1,000,000 in cash. Interest accrued and outstanding principal on the February 14, 2019 Promissory Note was due and payable on February 14, 2020. The February 14, 2019 Promissory Note may be prepaid any time without penalty. The note may be paid by the Company by issuing common stock to Mr. Burish with each share valued at $1.30 per share. The February 14, 2019 Promissory Note was later included in the Note Purchase Agreement, dated February 28, 2019, as detailed below.

February 28, 2019 Note Purchase Agreement

On February 28, 2019, Sonic Foundry, Inc. entered into a Note Purchase Agreement (the "Note Purchase Agreement") with Mr. Burish.

The Note Purchase Agreement provided for subordinated secured promissory notes (the "Subordinated Promissory Notes") in an aggregate original principal amount of up to $5,000,000. Mr. Burish acquired from the Company (a) on the initial closing date, the notes in an aggregate principal amount of $3,000,000 (the "Initial Notes") and (b) two additional tranches, each in the amount of $1,000,000 and payable at any time prior to the first anniversary of the Agreement (the "Additional Notes" and together with the Initial Notes, collectively, the "Purchase Price"). The Initial Notes were previously disbursed in January and February of 2019, as detailed above (the Promissory Note, the January 31, 2019 Promissory Note, and the February 14, 2019 Promissory Note, collectively referred to as the "Initial Notes"). The fourth tranche was disbursed on March 13, 2019 and the fifth and final tranche was disbursed on April 4, 2019.

The Subordinated Promissory Notes accrued interest at the variable per annum rate equal to the Prime Rate (as defined) plus four percent (4.00%). The outstanding principal balance of the Subordinated Promissory Notes, plus all unpaid accrued interest, plus all outstanding and unpaid obligations, was set to mature on February 28, 2024 (the "Maturity Date"). Principal installments of $100,000 were to begin monthly on August 31, 2020, and continue through the Maturity Date. The Note Purchase Agreement dated February 28, 2019 was subordinated to the existing PFG loan.

At each anniversary of the Closing, an administration fee will be payable to Mr. Burish equal to 0.5% of the purchase price less principal payments made.

The proceeds from the Note Purchase Agreement were allocated between the Subordinated Promissory Notes and the Burish Warrant based on their relative fair value on the date of issuance. The warrant was treated together as a debt discount on the Subordinated Notes Payable and was accreted to interest expense under the effective interest rate method over the five-year term of the Subordinated Notes Payable. During the first fiscal quarter of 2020, the Company recorded accretion of discount expense associated with the Subordinated Promissory Notes of $34 thousand.

The non-cash effective interest expense was calculated on the net balance of the Subordinated Promissory Notes, Burish Warrant, and related loan origination fees, on a monthly basis. During the three months ended December 31, 2019, $15 thousand of non-cash interest benefit related to the effective interest rate on the Subordinated Promissory Notes was recorded.

February 28, 2019 Warrant

Coincident with execution of the Note Purchase Agreement, the Company entered into a Warrant Agreement ("Burish Warrant") with Mr. Burish. Pursuant to the terms of the Burish Warrant, the Company issued to Mr. Burish a warrant to purchase up to 728,155 shares of common stock of the Company at an exercise price of $1.18 per share, subject to certain adjustments.

On April 25, 2019, Mr. Burish exercised his warrant to purchase 728,155 shares of common stock of the Company at an exercise price of $1.18 per share. A special committee of disinterested and independent directors approved the issuance of the Subordinated Promissory Notes and the Burish Warrant.

May 13, 2020 Debt Conversion Agreement

On May 13, 2020, the Company entered into a debt conversion agreement with Mr. Burish to convert all outstanding debt owed to Mr. Burish into common stock at a conversion price of $5.00 per share. The net carrying value of $5.0 million, including principal and accrued interest of $5.6 million less debt discount and loan origination fees of $596 thousand, was converted into 1,114,723 shares of common stock. The debt conversion was treated as a debt extinguishment, and resulted in a net loss of $26 thousand.

Paycheck Protection Program (PPP) Loan Dated April 20, 2020

Following the approval of the Board of Directors, the Company and First Business Bank entered into a $2.3 million Promissory Note (the "Promissory Note") under the Paycheck Protection Program (PPP) contained within the new Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP loan had a term of two years for those companies receiving loan proceeds prior to June 5, 2020, was unsecured, and was guaranteed by the U.S. Small Business Administration ("SBA"). The loan carried a fixed interest rate of 1% per annum. Under the terms of the CARES Act, the Company was eligible for and submitted its application for forgiveness of all loan proceeds on March 2, 2021. On June 14, 2021 the Company received SBA approval of forgiveness for the loan principal of $2,314,815 and $26,382 in interest.

When PPP Loan was received, US GAAP guidance for debt (ASC 470) was followed by the Company. Liability was recognized and interest was accrued over the term of the loan. Therefore, according to the guidance, the amount forgiven is recorded as gain from forgiveness of debt and the gain from forgiveness is presented on its own line within the statement of operations as other income. Previously recorded interest expense was reversed during the three months ended June 30, 2021. 

Other Indebtedness

On January 30, 2020, Mediasite K.K. entered into a Term Loan ("Term Loan") with Sumitomo Mitsui Banking Corporation for $460 thousand in cash. The Term loan accrued interest at an annual rate of 1.475%. Beginning in January 2020, principal payments in 12 equal monthly installments, plus accrued interest were made. The principal has been paid in full as of  December 30, 2020.

At June 30, 2021 and September 30, 2020, no balance was outstanding on the line of credit with Mitsui Sumitomo Bank. The credit facility is related to Mediasite K.K., and accrues interest at an annual rate of approximately one-and-one half percent (1.575%). The available line of credit at June 30, 2021 was $485 thousand and maturity date is on February 28, 2022.

On August 20, 2020, Mediasite K.K. and Sumitomo Mitsui Banking Corporation entered into a $379 thousand Promissory Note under an initiative by the Japanese Finance Corporation government institution in response to the Cabinet Decision entitled "Emergency Economic Measures to Cope With COVID-19." Extending financial relief to organizations impacted by COVID-19, the loan has a term of three years and carries a fixed interest rate of 0.46% per annum. Government subsidies provided through the Japanese Finance Corporations provide interest relief throughout the term of the loan. In addition, the loan agreement includes a three year grace period with principal payments deferred through the end of the loan, which is September 30, 2023. As of June 30, 2021 the full principal amount of the loan has been included in long-term notes payable.

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Note 5 - Income Taxes

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

5. Income Taxes

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has Net Operating Loss (NOL) carried over from previous years. The Company doesn't have income tax liability until it exhausts its NOL. Therefore, the Company had no accruals for interest and penalties on the Company’s Condensed Consolidated Balance Sheets at June 30, 2021 or September 30, 2020, and has not recognized any interest or penalties in the Condensed Consolidated Statements of Operations for either of the three or nine months ended June 30, 2021 or 2020.

The Company’s tax rate differs from the expected tax rate each reporting period as a result of permanent differences, the valuation allowance, international tax items, and forgiveness of the PPP loan. The Company's income tax expense for the three and nine months ended June 30, 2021 and 2020 primarily consists of income tax expense at its foreign subsidiaries.

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Note 6 - Revenue

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

6. Revenue

Disaggregation of Revenues

The following tables summarize revenues from contracts with customers for the three and nine months ended June 30, 2021 and 2020, respectively, (in thousands) by subsidiary, which includes the parent (SOFO), our Netherlands location (SFI) and our Japanese location (MSKK) :

Three months ended June 30, 2021
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	1,635	$	179	$	185	$	(297	)	$	1,702
Software		595		123		295		(76	)		937
Shipping		18		2		—		—			20
Product and other total		2,248		304		480		(373	)		2,659
Support		1,623		159		202		(222	)		1,762
Hosting		1,472		282		438		(169	)		2,023
Events		1,265		32		448		—			1,745
Installs, training & other		55		1		416		—			472
Services total		4,415		474		1,504		(391	)		6,002
Total revenue	$	6,663	$	778	$	1,984	$	(764	)	$	8,661

Nine Months Ended June 30, 2021
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	4,103	$	522	$	962	$	(745	)	$	4,842
Software		2,035		343		469		(332	)		2,515
Shipping		45		4		—		—			49
Product and other total		6,183		869		1,431		(1,077	)		7,406
Support		5,122		483		679		(640	)		5,644
Hosting		4,320		788		1,566		(232	)		6,442
Events		3,102		79		1,850		—			5,031
Installs, training & other		744		28		1,242		—			2,014
Services total		13,288		1,378		5,337		(872	)		19,131
Total revenue	$	19,471	$	2,247	$	6,768	$	(1,949	)	$	26,537

Three months ended June 30, 2020
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	1,635	$	272	$	111	$	(310	)	$	1,708
Software		707		105		330		(122	)		1,020
Shipping		13		3		—		—			16
Product and other total		2,355		380		441		(432	)		2,744
Support		1,865		146		458		(128	)		2,341
Hosting		1,358		145		202		—			1,705
Events		702		23		168		—			893
Installs, training & other		217		17		—		—			234
Services total		4,142		331		828		(128	)		5,173
Total revenue	$	6,497	$	711	$	1,269	$	(560	)	$	7,917

Nine Months Ended June 30, 2020
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	4,244	$	491	$	308	$	(507	)	$	4,536
Software		2,304		358		561		(356	)		2,867
Shipping		203		6		—		—			209
Product and other total		6,751		855		869		(863	)		7,612
Support		5,762		437		1,695		(488	)		7,406
Hosting		3,496		425		899		—			4,820
Events		2,725		97		1,495		—			4,317
Installs, training & other		425		19		—		—			444
Services total		12,408		978		4,089		(488	)		16,987
Total revenue	$	19,159	$	1,833	$	4,958	$	(1,351	)	$	24,599

Transaction price allocated to future performance obligations

As of June 30, 2021, the aggregate amount of the transaction price that is allocated to our future performance obligations was approximately $3.2 million in the next three months, $7.9 million in the next twelve months, and the remaining $1.9 million thereafter.

Disclosures related to our contracts with customers

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current unearned revenue.

Unearned revenues

Unearned revenues represent our obligation to transfer products or services to our client for which we have received consideration, or an amount of consideration is due, from the client. During the three and nine months ended June 30, 2021, revenues recognized related to the amount included in the unearned revenues balance at the beginning of the period was $2.0 million and $9.1 million , respectively, compared to $2.2 million and $8.9 million, respectively, recognized during the  three and nine months ended June 30, 2020.

Assets recognized from the costs to obtain our contracts with customers

We recognize an asset for the incremental costs of obtaining a contract with a customer. We amortize these deferred costs, primarily capitalized commissions, proportionate with related revenues over the period of the contract. During the three and nine months ended June 30, 2021, amortization expense related to the amount included in the capitalized commissions at the beginning of the period was $96 thousand and $440 thousand, respectively, compared to $114 thousand and $444 thousand, respectively, recognized during the three and nine months ended June 30, 2020.

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Note 7 - Subsequent Event

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

7. Subsequent Event

Equity Raise:

On July 20, 2021, the Company entered into a transaction with four investors on identical terms pursuant to which they agreed to purchase, and the Company agreed to issue and sell, an aggregate of 945,946 shares at a price of $3.70 per share (total of $3,500,000). The Company closed on the issuance and sale on July 27, 2021. The Company and the investors also entered into (i) warrant agreements pursuant to which the investors have the right to purchase 141,892 shares at a price of $5.50 per share on or before July 20, 2026 and, (ii) registration rights agreements (“Rights Agreement”) whereby the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission (the “Commission”) within six months after the effective date of the Rights Agreement and further agreed to use its commercially reasonable efforts to have the registration statement declared effective and to ensure that the registration statement remains effective throughout the term of the Rights Agreement.

The investors above included Mr. Mark Burish, the Company’s chairman and largest shareholder who purchased $1,250,000 of common stock for a total of 337,838 shares and 50,676 warrants. The Company’s special committee of disinterested directors met several times to discuss and negotiate the terms of the above transactions, including the participation of Mr. Burish. The special committee unanimously approved such terms.

   Line of Credit

The Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association (the “Bank”) on July 28, 2021. Under the Credit Agreement the Company may borrow the lesser of $3,000,000 or the applicable Borrowing Base comprised of (1) 80% of Qualified Accounts Receivable; (2) 50% of Qualified Inventory; and (3) an available over-advance of $500,000.

The Credit Agreement matures on July 28, 2022, is secured by all assets of the Company and accrues an interest rate equal to the one-month LIBOR rate plus 1.35% per annum, paid monthly. The Credit Agreement requires compliance with typical warranties and covenants including financial covenants of (1) Fixed Charge Coverage Ratio, as defined in the agreement, of at least 1.20:1 at the end of each quarter and (2) Senior Cash Flow Coverage Ratio, as defined in the agreement, of no more than 3.00:1 for each fiscal quarter.

In connection with the Credit Agreement, the Company entered into the Stock Pledge Agreement with the Bank, as a condition of the Credit Loan. Upon default, the Bank shall have the right to transfer and claim the securities of the subsidiaries, Sonic Foundry International B.V. in Netherland and Mediasite K.K. in Japan.

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Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Effect of Covid-19 Pandemic [Policy Text Block]

Impacts of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.  While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration, severity and impact of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as those of our key business partners, vendors and other counterparties for an indefinite period of time.  To support the health and well-being of our employees, business partners and communities, a vast majority of our employees have been working remotely since mid- March 2020 and continue to do so. The Company continues to follow guidelines outlined by the CDC and local county protocol. On August 2, 2021, the Company returned to in-person working. . The Company will implement a newly developed hybrid module to allow employees to work 60% in office and 40% from home.

COVID-19 has had negative impacts on our operations and the future impacts of the pandemic and any corresponding economic results are largely unknown and rapidly evolving.  Beginning in March 2020, the in-person events portion of our business was, and continues to be, significantly impacted by cancellations and/or postponements due to social distancing protocols enacted to stop the spread of the virus.  In response to the cancellations, the Company introduced a new virtual events platform as an alternate solution for our customers. While a return to in-person events and conferences was anticipated to begin during the summer of 2021, a full return is not anticipated until 2022. In addition, the Company is confident many future in-person events will be hybrid and will include our virtual events platform. 

Costs Associated with Exit or Disposal Activity or Restructuring [Policy Text Block]

Restructuring and exit activities

The determination of when the Company accrues for involuntary termination benefits under restructuring plans depends on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement. The Company accounts for on-going benefit arrangements, such as those documented by employment agreements, in accordance with Accounting Standards Codification 712 ("ASC 712") Nonretirement Postemployment Benefits. Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations. When applicable, the Company records such costs into operating expense.

For the three and nine months ended June 30, 2021, the Company expensed involuntary termination benefits of $56 and $157 thousand under ASC 420 compared to zero during the same periods last year.

Lessor, Leases [Policy Text Block]

Investment in Sales-Type Lease

The Company has entered into sales-type lease arrangements with certain customers, consisting of recorders leased with terms ranging from 3-5 years.

Investment in sales-type leases consists of the following (in thousands) as of June 30, 2021:

Investment in sales-type lease, gross:
2021	$	93
2022		116
2023		43
2024		43
2025		43
Gross investment in sales-type lease		338
Less: Unearned income		1
Total investment in sales-type lease	$	337
Current portion of total investment in sales-type lease	$	148
Long-term portion of total investment in sales-type lease		189
	$	337

Inventory, Policy [Policy Text Block]

Inventory

Inventory consists of raw materials and supplies used in the assembly of Mediasite recorders and finished units. Inventory of completed units and spare parts are carried at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. An obsolescence reserve has been established to account for slow moving inventory.

Inventory consists of the following (in thousands):

	June 30,			September 30,
	2021			2020
Raw materials and supplies	$	171		$	267
Finished goods		400			1,022
Less: Obsolescence reserve		(122	)		(122	)
	$	449		$	1,167

Asset Retirement Obligation [Policy Text Block]

Asset Retirement Obligation

An asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset is recognized as a liability in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of the related long-term asset.  The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset.  As of  June 30, 2021 and September 30, 2020, the Company has recorded a liability of $127 thousand and $134 thousand, respectively, for retirement obligations associated with returning the MSKK leased property to the respective lessors upon the termination of the lease arrangement. Asset retirement obligations are included in other-long term liabilities on the condensed consolidated balance sheets.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

In determining the fair value of financial assets and liabilities, the Company currently utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market, and adjusts for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible to the Company at the measurement date.

Level 2 Inputs: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3.

Financial Liabilities Measured at Fair Value on Recurring Basis

The fair value of the bifurcated conversion feature represented by the warrant derivative liability associated with the PFG debt is measured at fair value on a recurring basis based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described for share-based compensation which were generally observable (Level 2).

Financial liabilities measured at fair value on a recurring basis are summarized below (in thousands):

June 30, 2021	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	63	$	—	$	63

September 30, 2020	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	66	$	—	$	66

The gain or loss related to the fair value remeasurement on the derivative liability is included in the other expense line on the condensed consolidated statements of operations.

Financial Liabilities Measured at Fair Value on a Non-Recurring Basis

The initial fair values of PFG debt and warrant debt (see Note 4) were based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3). 

The Mr. Mark D. Burish ("Mr. Burish") warrant was measured at fair value using a Black Scholes model and the remaining fair value was allocated to the related Mr. Burish note purchase agreement (see Note 4) which management believes materially approximated the fair value based on calculating the present value of expected future cash flows (Level 3). The non-recurring fair value measurements were performed as of the date of issuance of the note purchase agreement and warrant. The discount was being amortized over the life of the related debt until May 2020, at which time the debt was extinguished and exchanged for the Company's common stock.

Financial Instruments Not Measured at Fair Value

The Company's other financial instruments consist primarily of cash and cash equivalents, accounts receivable, investment in sales-type lease, accounts payable, debt instruments and capital lease obligations. The book values of cash and cash equivalents, accounts receivable, investment in sales-type lease, and accounts payable are considered to be representative of their respective fair values due their short term nature. The carrying value of debt, including the current portion, approximates fair market value as the variable and fixed rate approximates the current market rate of interest available to the Company.

Legal Costs, Policy [Policy Text Block]

Legal Contingencies

When legal proceedings are brought or claims are made against the Company and the outcome is uncertain, we are required to determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings.

No legal contingencies were recorded or were required to be disclosed for the three or nine months ended June 30, 2021 or 2020.

Share-based Payment Arrangement [Policy Text Block]

Stock Based Compensation

The Company uses a lattice valuation model to account for all employee stock options granted. The lattice valuation model is a more flexible analysis to value options because of its ability to incorporate inputs that change over time, such as actual exercise behavior of option holders. The Company uses historical data to estimate the option exercise and employee departure behavior in the lattice valuation model. Expected volatility is based on historical volatility of the Company’s stock. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods the options are expected to be outstanding is based on the U.S. Treasury yields in effect at the time of grant. Forfeitures are based on actual behavior patterns. The expected exercise factor and forfeiture rates are calculated using historical exercise and forfeiture activity for the previous three years.

The fair value of each option grant is estimated using the assumptions in the following table:

	Nine Months Ended
	June 30,
	2021	2020
Expected life	4.3-4.7 years	4.5 years
Risk-free interest rate	0.33% - 0.58%	1.14% - 1.63%
Expected volatility	65.23% - 83.29%	72.40% - 73.46%
Expected forfeiture rate	14.18% -16.41%	15.05% - 15.38%
Expected exercise factor	1.2	1.2
Expected dividend yield	0%	0%

A summary of option activity at June 30, 2021 and changes during the nine months then ended is presented below:

				Weighted-		Weighted-Average
				Average		Remaining Contractual
	Options			Exercise Price		Period in Years
Outstanding at October 1, 2020		1,707,515,		$	5.08		4.6
Granted		564,967			3.40		9.8
Exercised		(119,902	)		2.22		0.0
Forfeited		(271,060	)		7.16		0.0
Outstanding at June 30, 2021		1,881,520			4.46		6.4
Exercisable at June 30, 2021		1,289,896			5.14		5.2

A summary of the status of the Company’s non-vested options and changes during the nine month period ended June 30, 2021 is presented below:

				Weighted-Average
				Grant Date Fair
Non-vested Options	Options			Value
Non-vested at October 1, 2020		339,897		$	0.60
Granted		564,967			1.58
Vested		(265,826	)		0.89
Forfeited		(47,414	)		1.15
Non-vested at June 30, 2021		591,623		$	1.38

The weighted average grant date fair value of options granted during the nine months ended June 30, 2021 was $1.58. As of June 30, 2021, there was $557 thousand of total unrecognized compensation cost related to non-vested stock-based compensation, with total forfeiture adjusted unrecognized compensation cost of $408 thousand. The cost is expected to be recognized over a weighted-average remaining life of 4.3 years.

Stock-based compensation recorded in the three and nine months ended June 30, 2021 was $82 thousand and $365 thousand, respectively. Stock-based compensation recorded in the three and nine months ended June 30, 2020 was $18 thousand and $104 thousand, respectively. There was $59 thousand and $247 thousand in cash received from transactions under all stock option plans during the three and nine months ended June 30, 2021 and $18 thousand and $18 thousand during the same period of the three and nine months ended June 30, 2020. There were no tax benefits realized for tax deductions from option exercises in either of the three and nine month periods ended June 30, 2021 or 2020. The Company currently expects to satisfy share-based awards with registered shares available to be issued.

The Company also has an Employee Stock Purchase Plan ("Purchase Plan") under which an aggregate of 300,000 common shares may be issued. The board passed a resolution in December 2020 to increase the share count by an additional 100,000 shares, which was approved by common stockholders in January 2021. A total of 99,667 shares are available to be issued under the plan at  June 30, 2021. The Company recorded stock compensation expense under this plan of $1 thousand and $6 thousand for the for the three and nine month periods ended June 30, 2021 and less than $1 thousand and $2 thousand for the three and nine month periods ended June 30, 2020.

Preferred Stock and Dividends [Policy Text Block]

Preferred Stock and Dividends

No shares of Preferred Stock, Series A were issued and outstanding as of June 30, 2021 and 2020.

Earnings Per Share, Policy [Policy Text Block]

Per Share Computation

Basic earnings (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares that may be repurchased, and excludes any dilutive effects of options and warrants. In periods where the Company reports net income, diluted net income per share is computed using common equivalent shares related to outstanding options and warrants to purchase common stock. The numerator for the calculation of basic and diluted earnings per share is net income (loss) attributable to common stockholders. The following table sets forth the computation of basic and diluted weighted average shares used in the earnings per share calculations:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Denominator for basic net income (loss) per share - weighted average common shares		8,060,036		7,399,545		8,021,852		6,972,924
Effect of dilutive options and warrants (treasury method)		485,120		430,748		459,004		—
Denominator for diluted net income (loss) per share - adjusted weighted average common shares		8,545,156		7,830,293		8,480, 856		6,972,924
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net loss per share because they are antidilutive		1,078,832		1,630,706		1,291,332		2,061,454

The Company issued 945,946 shares on July 27, 2021 in conjunction with an equity raise (see Note 7). If these shares were issued at the end of the reporting period, it would materially change the number of common shares outstanding.

Liquidity [Policy Text Block]

Liquidity

At June 30, 2021, approximately $3.4 million of cash and cash equivalents was held by the Company's foreign subsidiaries.

The Company believes its cash position plus available resources is adequate to accomplish its business plan through at least the next 12 months. The Company completed a common stock issuance to certain investors totaling $3.5 million, net of $75 thousand expenses, on July 27, 2021. The proceeds of the stock issuance are intended to satisfy the initial listing requirements of the Nasdaq Capital Market. Additionally, the Company signed a line of credit agreement on July 28, 2021, with US Bank for $3 million at an annual rate equal to 1.35% plus the greater of zero percent and the one month LIBOR rate. The Company will likely evaluate lease opportunities to finance equipment purchases in the future and support working capital needs as well as seek additional equity financing opportunities. However, there are no assurances that these will be on terms acceptable to the Company.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", ("ASU 2019-12"). The amendments in this ASU affect entities within the scope of Topic 740. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for public entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. An entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the guidance and its impact to the financial statements.

Accounting standards that have been issued but are not yet effective by the FASB or other standards-setting bodies that do not require adoption until a future date, which are not discussed above, are not expected to have a material impact on the Company’s financial statements upon adoption.

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Note 1 - Basis of Presentation and Significant Accounting Policies (Tables)

9 Months Ended

Jun. 30, 2021

Notes Tables

Investment in Sales-type Leases [Table Text Block]

Investment in sales-type lease, gross:
2021	$	93
2022		116
2023		43
2024		43
2025		43
Gross investment in sales-type lease		338
Less: Unearned income		1
Total investment in sales-type lease	$	337
Current portion of total investment in sales-type lease	$	148
Long-term portion of total investment in sales-type lease		189
	$	337

Schedule of Inventory, Current [Table Text Block]

	June 30,			September 30,
	2021			2020
Raw materials and supplies	$	171		$	267
Finished goods		400			1,022
Less: Obsolescence reserve		(122	)		(122	)
	$	449		$	1,167

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

June 30, 2021	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	63	$	—	$	63

September 30, 2020	Level 1		Level 2		Level 3		Total Fair Value
Derivative liability	$	—	$	66	$	—	$	66

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

	Nine Months Ended
	June 30,
	2021	2020
Expected life	4.3-4.7 years	4.5 years
Risk-free interest rate	0.33% - 0.58%	1.14% - 1.63%
Expected volatility	65.23% - 83.29%	72.40% - 73.46%
Expected forfeiture rate	14.18% -16.41%	15.05% - 15.38%
Expected exercise factor	1.2	1.2
Expected dividend yield	0%	0%

Share-based Payment Arrangement, Option, Activity [Table Text Block]

				Weighted-		Weighted-Average
				Average		Remaining Contractual
	Options			Exercise Price		Period in Years
Outstanding at October 1, 2020		1,707,515,		$	5.08		4.6
Granted		564,967			3.40		9.8
Exercised		(119,902	)		2.22		0.0
Forfeited		(271,060	)		7.16		0.0
Outstanding at June 30, 2021		1,881,520			4.46		6.4
Exercisable at June 30, 2021		1,289,896			5.14		5.2

Schedule of Nonvested Share Activity [Table Text Block]

				Weighted-Average
				Grant Date Fair
Non-vested Options	Options			Value
Non-vested at October 1, 2020		339,897		$	0.60
Granted		564,967			1.58
Vested		(265,826	)		0.89
Forfeited		(47,414	)		1.15
Non-vested at June 30, 2021		591,623		$	1.38

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Denominator for basic net income (loss) per share - weighted average common shares		8,060,036		7,399,545		8,021,852		6,972,924
Effect of dilutive options and warrants (treasury method)		485,120		430,748		459,004		—
Denominator for diluted net income (loss) per share - adjusted weighted average common shares		8,545,156		7,830,293		8,480, 856		6,972,924
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net loss per share because they are antidilutive		1,078,832		1,630,706		1,291,332		2,061,454

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Note 3 - Commitments (Tables)

9 Months Ended

Jun. 30, 2021

Notes Tables

Lessee, Lease Liability, Maturity [Table Text Block]

	Operating Leases			Finance Leases
2021 (remaining)	$	380		$	23
2022		1,007			79
2023		865			7
2024		700			5
2025		34			—
Thereafter		65			—
Total		3,051			114
Less: imputed interest		(180	)		(5	)
Total	$	2,871		$	109

Lease, Cost [Table Text Block]

	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Operating lease costs	$	1,107	$	990
Variable operating lease costs		(110)		22
Total operating lease cost	$	997	$	1,012
Finance lease cost:
Amortization of right-of-use assets	$	47	$	147
Interest on lease liabilities		8		17
Total finance lease cost	$	55	$	164

Supplement Cash Flow Information [Table Text Block]

	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	956	$	1,016
Operating cash outflows for finance leases		8		17
Financing cash outflows for finance leases		98		162

	June 30, 2021			June 30, 2020
Weighted average remaining lease term (in years)
Operating leases		3.0			2.4
Finance leases		1.5			2.2
Weighted average discount rate
Operating leases		4.00	%		9.54	%
Finance leases		7.28	%		7.22	%

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Note 6 - Revenue (Tables)

9 Months Ended

Jun. 30, 2021

Notes Tables

Disaggregation of Revenue [Table Text Block]

Three months ended June 30, 2021
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	1,635	$	179	$	185	$	(297	)	$	1,702
Software		595		123		295		(76	)		937
Shipping		18		2		—		—			20
Product and other total		2,248		304		480		(373	)		2,659
Support		1,623		159		202		(222	)		1,762
Hosting		1,472		282		438		(169	)		2,023
Events		1,265		32		448		—			1,745
Installs, training & other		55		1		416		—			472
Services total		4,415		474		1,504		(391	)		6,002
Total revenue	$	6,663	$	778	$	1,984	$	(764	)	$	8,661

Nine Months Ended June 30, 2021
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	4,103	$	522	$	962	$	(745	)	$	4,842
Software		2,035		343		469		(332	)		2,515
Shipping		45		4		—		—			49
Product and other total		6,183		869		1,431		(1,077	)		7,406
Support		5,122		483		679		(640	)		5,644
Hosting		4,320		788		1,566		(232	)		6,442
Events		3,102		79		1,850		—			5,031
Installs, training & other		744		28		1,242		—			2,014
Services total		13,288		1,378		5,337		(872	)		19,131
Total revenue	$	19,471	$	2,247	$	6,768	$	(1,949	)	$	26,537

Three months ended June 30, 2020
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	1,635	$	272	$	111	$	(310	)	$	1,708
Software		707		105		330		(122	)		1,020
Shipping		13		3		—		—			16
Product and other total		2,355		380		441		(432	)		2,744
Support		1,865		146		458		(128	)		2,341
Hosting		1,358		145		202		—			1,705
Events		702		23		168		—			893
Installs, training & other		217		17		—		—			234
Services total		4,142		331		828		(128	)		5,173
Total revenue	$	6,497	$	711	$	1,269	$	(560	)	$	7,917

Nine Months Ended June 30, 2020
	SOFO		SFI		MSKK		Eliminations			Total
Revenue:
Hardware	$	4,244	$	491	$	308	$	(507	)	$	4,536
Software		2,304		358		561		(356	)		2,867
Shipping		203		6		—		—			209
Product and other total		6,751		855		869		(863	)		7,612
Support		5,762		437		1,695		(488	)		7,406
Hosting		3,496		425		899		—			4,820
Events		2,725		97		1,495		—			4,317
Installs, training & other		425		19		—		—			444
Services total		12,408		978		4,089		(488	)		16,987
Total revenue	$	19,159	$	1,833	$	4,958	$	(1,351	)	$	24,599

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Note 1 - Basis of Presentation and Significant Accounting Policies (Details Textual) - USD ($)			1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 28, 2021	Jul. 27, 2021	Dec. 31, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Asset Retirement Obligation, Ending Balance				$ 127,000		$ 127,000		$ 134,000
Litigation Settlement, Amount Awarded to Other Party				0	$ 0	$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)						$ 1.58
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total				557,000		$ 557,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Total Forfeiture Adjusted Amount				408,000		$ 408,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)						4 years 3 months 18 days
Share-based Payment Arrangement, Expense				82,000	18,000	$ 365,000	104,000
Proceeds from Stock Options Exercised				59,000	18,000	247,000	18,000
Share-based Payment Arrangement, Expense, Tax Benefit				$ 0	$ 0	$ 0	$ 0
Preferred Stock, Shares Issued, Total (in shares)				0		0		0
Cash and Cash Equivalents, at Carrying Value, Ending Balance				$ 5,445,000		$ 5,445,000		$ 7,619,000
Japan and the Netherlands [Member]
Cash and Cash Equivalents, at Carrying Value, Ending Balance				$ 3,400,000		$ 3,400,000
Subsequent Event [Member]
Stock Issued During Period, Shares, New Issues (in shares)		945,946
Proceeds from Issuance of Common Stock, Net		$ 3,500,000
Payments of Stock Issuance Costs		$ 75,000
Subsequent Event [Member] | US Bank [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000,000
Subsequent Event [Member] | US Bank [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.35%
Series A Preferred Stock [Member]
Preferred Stock, Shares Issued, Total (in shares)				0	0	0	0	0
Preferred Stock, Shares Outstanding, Ending Balance (in shares)			0	0		0		0
Employee Stock Purchase Plan [Member]
Share-based Payment Arrangement, Expense				$ 1,000	$ 1,000	$ 6,000	$ 2,000
Common Stock, Capital Shares Reserved for Future Issuance (in shares)			300,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares)			100,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)				99,667		99,667
Minimum [Member]
Lessor, Sales-type Lease, Term of Contract (Year)				3 years		3 years
Maximum [Member]
Lessor, Sales-type Lease, Term of Contract (Year)				5 years		5 years
One-time Termination Benefits [Member]
Restructuring Charges, Total				$ 56,000	$ 0	$ 157,000	$ 0

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Note 1 - Basis of Presentation and Significant Accounting Policies - Investment in Sales-type Leases (Details) $ in Thousands	Jun. 30, 2021 USD ($)
2021	$ 93
2022	116
2023	43
2024	43
2025	43
Gross investment in sales-type lease	338
Less: Unearned income	1
Total investment in sales-type lease	337
Current portion of total investment in sales-type lease	148
Long-term portion of total investment in sales-type lease	189
Net Investment in Lease, before Allowance for Credit Loss, Noncurrent	$ 337

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Note 1 - Basis of Presentation and Significant Accounting Policies - Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Raw materials and supplies	$ 171	$ 267
Finished goods	400	1,022
Less: Obsolescence reserve	(122)	(122)
Inventory, Net, Total	$ 449	$ 1,167

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Note 1 - Basis of Presentation and Significant Accounting Policies - Financial Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Derivative liability	$ 63	$ 66
Fair Value, Inputs, Level 1 [Member]
Derivative liability	0	0
Fair Value, Inputs, Level 2 [Member]
Derivative liability	63	66
Fair Value, Inputs, Level 3 [Member]
Derivative liability	$ 0	$ 0

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Note 1 - Basis of Presentation and Significant Accounting Policies - Fair Value Assumptions for Stock Options Granted (Details)	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Expected life (Year)		4 years 6 months
Expected exercise factor	1.20%	1.20%
Expected dividend yield	0.00%	0.00%
Minimum [Member]
Risk-free interest rate	0.33%	1.14%
Expected volatility	65.23%	72.40%
Expected forfeiture rate		15.05%
Maximum [Member]
Risk-free interest rate	0.58%	1.63%
Expected volatility	83.29%	73.46%
Expected forfeiture rate		15.38%

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Note 1 - Basis of Presentation and Significant Accounting Policies - Option Activity (Details) - $ / shares	9 Months Ended	12 Months Ended
	Jun. 30, 2021	Sep. 30, 2020
Options, Outstanding at beginning of year (in shares)	1,707,515
Weighted Average Exercise Price, Outstanding Balance (in dollars per share)	$ 5.08
Weighted Average Remaining Contractual Period in Years, Outstanding Ending Balance (Year)	6 years 4 months 24 days	4 years 7 months 6 days
Options, Granted (in shares)	564,967
Weighted Average Exercise Price, Granted (in dollars per share)	$ 3.40
Weighted Average Remaining Contractual Period in Years, Granted (Year)	9 years 9 months 18 days
Options, Exercised (in shares)	(119,902)
Weighted Average Exercise Price, Exercised (in dollars per share)	$ 2.22
Weighted Average Remaining Contractual Period in Years, Exercised (Year)	0 years
Weighted Average Exercise Price, Forfeited (in dollars per share)	$ 7.16
Weighted Average Remaining Contractual Period in Years, Forfeited (Year)	0 years
Options, Outstanding at end of year (in shares)	1,881,520	1,707,515
Weighted Average Exercise Price, Outstanding Balance (in dollars per share)	$ 4.46	$ 5.08
Options, Exercisable at end of year (in shares)	1,289,896
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 5.14
Weighted Average Remaining Contractual Period in Years, Exercisable Ending Balance (Year)	5 years 2 months 12 days

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Note 1 - Basis of Presentation and Significant Accounting Policies - Summary of Status of Company's Non-vested Shares (Details)	9 Months Ended
	Jun. 30, 2021 $ / shares shares
Non-vested options (in shares) | shares	339,897
Weighted-Average Grant Date Fair Value, Non-vested Balance (in dollars per share) | $ / shares	$ 0.60
Options, Granted (in shares) | shares	564,967
Weighted-Average Grant Date Fair Value, Non-vested granted (in dollars per share) | $ / shares	$ 1.58
Non-vested options, vested (in shares) | shares	(265,826)
Weighted-Average Grant Date Fair Value, vested (in dollars per share) | $ / shares	$ 0.89
Non-vested options, forfeited (in shares) | shares	(47,414)
Weighted-Average Grant Date Fair Value, forfeited (in dollars per share) | $ / shares	$ 1.15
Non-vested options (in shares) | shares	591,623
Weighted-Average Grant Date Fair Value, Non-vested Balance (in dollars per share) | $ / shares	$ 1.38

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Note 1 - Basis of Presentation and Significant Accounting Policies - Computation of Basic and Diluted Weighted Average Shares Used in Earnings Per Share Calculations (Details) - shares	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
– basic (in shares)	8,060,036	7,399,545	8,021,852	6,972,924
Effect of dilutive options and warrants (treasury method) (in shares)	485,120	430,748	459,004	0
– diluted (in shares)	8,545,156	7,830,293	8,480,856	6,972,924
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net loss per share because they are antidilutive (in shares)	1,078,832	1,630,706	1,291,332	2,061,454

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Note 2 - Related Party Transactions (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	May 13, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Board of Directors Chairman [Member] | Minimum [Member]
Percentage of Common Stock		5.00%		5.00%
Board of Directors Chairman [Member] | Conversion of Debt to Common Stock [Member]
Debt Instrument, Convertible, Conversion Price (in dollars per share)	$ 5.00
Debt Conversion, Original Debt, Amount	$ 5,600
Debt Conversion, Converted Instrument, Shares Issued (in shares)	1,114,723
Affiliated Entity [Member] | Minimum [Member]
Percentage of Common Stock		5.00%		5.00%
Incurred Fees [Member] | Law Firm Whose Partner is a Director and Stockholder [Member]
Related Party Transaction, Expenses from Transactions with Related Party		$ 30	$ 112	$ 91	$ 372
Accrued Liability for Unbilled Services [Member] | Law Firm Whose Partner is a Director and Stockholder [Member]
Due to Related Parties, Current, Total		$ 18		$ 18		$ 7

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Note 3 - Commitments (Details Textual) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Jun. 30, 2021	Sep. 30, 2021	Sep. 30, 2020
Recorded Unconditional Purchase Obligation, Total	$ 529
Recorded Unconditional Purchase Obligation, to be Paid, Remainder of Fiscal Year	62
Recorded Unconditional Purchase Obligation, to be Paid, Year Two	423
Finance Lease, Right-of-Use Asset, after Accumulated Amortization, Total	93		$ 191
Recorded Unconditional Purchase Obligation, to be Paid, Year One	$ 423
Forecast [Member]
COVID Landlord Rent Credit, Monthly Rent Credit		$ 53
Office Space Lease Agreement, June 28, 2011 [Member]
Lessee, Operating Lease, Renewal Term (Year)	3 years
Building Leases [Member]
Lessee, Operating Lease, Renewal Term (Year)	3 years
Lessee, Operating Lease, Term of Contract (Year)	2 years 6 months
Lessee, Operating Lease, Monthly Rent Expense, Year One	$ 56
Lessee, Operating Lease, Monthly Rent Expense, Annual Increase, Escalation Rate, Year Two of the Lease	4.30%
Lessee, Operating Lease, Monthly Rent Expense, Annual Increase, Escalation Rate, Year Three of the Lease	3.30%

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Note 3 - Commitments - Maturities of Operating and Finance Lease (Details) $ in Thousands	Jun. 30, 2021 USD ($)
2021 (remaining), operating lease	$ 380
2021 (remaining), finance lease	23
2022, operating lease	1,007
2022, finance lease	79
2023, operating lease	865
2023, finance lease	7
2024, operating lease	700
2024, finance lease	5
2025, operating lease	34
2025, finance lease	0
Thereafter, operating lease	65
Thereafter, finance lease	0
Total, operating lease	3,051
Total, finance lease	114
Less: imputed interest, operating lease	(180)
Less: imputed interest, finance lease	(5)
Total, operating lease	2,871
Total, finance lease	$ 109

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Note 3 - Commitments - Supplement Information Related to Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating lease costs	$ 1,107	$ 990
Variable operating lease costs	(110)	22
Total operating lease cost	997	1,012
Amortization of right-of-use assets	47	147
Interest on lease liabilities	8	17
Total finance lease cost	$ 55	$ 164

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Note 3 - Commitments - Supplement Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating cash outflows for operating leases	$ 956	$ 1,016
Operating cash outflows for finance leases	8	17
Financing cash outflows for finance leases	$ 98	$ 162
Operating leases (Year)	3 years	2 years 4 months 24 days
Finance leases (Year)	1 year 6 months	2 years 2 months 12 days
Operating leases	4.00%	9.54%
Finance leases	7.28%	7.22%

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Note 4 - Credit Arrangements (Details Textual) - USD ($)					1 Months Ended	3 Months Ended				6 Months Ended	9 Months Ended
	Jun. 14, 2021	Aug. 20, 2020	May 13, 2020	Feb. 28, 2019	Aug. 31, 2020	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019	Mar. 31, 2021	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020	Apr. 20, 2020	Jan. 30, 2020	Apr. 25, 2019	Feb. 14, 2019	Jan. 31, 2019	Jan. 04, 2019	May 14, 2018	May 11, 2018
Derivative Liability, Noncurrent						$ 63,000					$ 63,000		$ 66,000
Derivative, Gain (Loss) on Derivative, Net, Total											$ 3,000	$ (116,000)
Common Stock, Par or Stated Value Per Share (in dollars per share)						$ 0.01					$ 0.01		$ 0.01
Gain (Loss) on Extinguishment of Debt, Total						$ 2,325,000		$ 0			$ 2,325,000	0
Director [Member]
Administration Fee Payable, Percentage of Purchase Price Less Principal Payments				0.50%
Board of Directors Chairman [Member] | Conversion of Debt to Common Stock [Member]
Debt Instrument, Convertible, Conversion Price (in dollars per share)			$ 5.00
Debt Conversion, Converted Instrument, Shares Issued (in shares)			1,114,723
February 28, 2019 Warrant [Member] | Director [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)						728,155					728,155					728,155
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 1.18					$ 1.18					$ 1.18
Partners For Growth VL.P. [Member] | Warrant to Purchase Common Stock [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)																					66,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)																					$ 2.57
Exchange Price of Warrant																					$ 250,000
PFG V Debt [Member]
Long-term Debt, Gross										$ 2,300,000
Warrant Debt [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Issuances										$ 156,000
Burish Notes, Net of Discount [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance						$ 0					$ 0		$ 667,000
Subordinated Promissory Notes [Member]
Debt Instrument, Term (Year)							5 years
Amortization of Debt Discount (Premium)									$ 34,000
Non-Cash Interest Expense, Debt									$ (15,000)
Debt Instrument, Basis Spread on Variable Rate				4.00%
Debt Instrument, Periodic Payment, Principal					$ 100,000
May 13, 2020 Debt Conversion Agreement [Member] | Board of Directors Chairman [Member]
Long-term Debt, Gross			$ 5,600,000
Debt Instrument, Face Amount			5,000,000.0
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net, Total			596,000
Gain (Loss) on Extinguishment of Debt, Total			$ (26,000)
Paycheck Protection Program CARES Act [Member]
Debt Instrument, Face Amount														$ 2,300,000
Debt Instrument, Decrease, Forgiveness	$ 2,314,815
Debt Instrument, Interest Forgiven	$ 26,382
Term Loan [Member]
Debt Instrument, Interest Rate, Stated Percentage															1.475%
Debt Instrument, Face Amount															$ 460,000
Debt Instrument, Number of Equal Monthly Installment															12
Promissory Note [Member] | Mediasite K.K. and Mitsui Sumitomo Bank [Member]
Debt Instrument, Interest Rate, Stated Percentage		0.46%
Debt Instrument, Term (Year)		3 years
Debt Instrument, Face Amount		$ 379,000
Debt Instrument, Grace Period (Year)		3 years
Partners For Growth VL.P. [Member]
Derivative Liability, Noncurrent						63,000					63,000		66,000
Derivative, Gain (Loss) on Derivative, Net, Total						22,000		(52,000)			3,000	(116,000)
Partners For Growth VL.P. [Member] | PFG V Debt [Member]
Debt Instrument, Fee Amount						150,000					150,000
Debt Instrument, Term (Year)										3 years
Amortization of Debt Discount (Premium)						6,000		14,000			34,000	42,000
Interest Expense, Debt, Total						6,000		13,000			31,000	38,000
Partners For Growth VL.P. [Member] | Warrant Debt [Member]
Long-term Debt, Gross						191,000					191,000
Debt Instrument, Term (Year)										5 years
Accretion Expense						$ 4,000		6,000			$ 7,000	17,000
Mitsui Sumitomo Bank [Member]
Line of Credit Facility, Interest Rate at Period End						1.575%					1.575%
Line of Credit Facility, Maximum Borrowing Capacity						$ 485,000					$ 485,000
Term Loan [Member] | Partners For Growth VL.P. [Member] | Loan and Security Agreement 2018 [Member]
Long-term Debt, Total																				$ 2,500,000
Debt Instrument, Number of Equal Monthly Principal Installments																				30
Debt Instrument, Fee Amount																					$ 150,000
Term Loan Tranche 1 [Member] | Partners For Growth VL.P. [Member] | Loan and Security Agreement 2018 [Member]
Long-term Debt, Total																				$ 2,000,000
Debt Instrument, Interest Rate, Stated Percentage																				10.75%
Term Loan Tranche 2 [Member] | Partners For Growth VL.P. [Member] | Loan and Security Agreement 2018 [Member]
Long-term Debt, Total																				$ 500,000
Senior Notes [Member] | Subordinated Promissory Notes [Member]
Debt Instrument, Interest Rate, Stated Percentage																	9.25%	9.25%	9.25%
Debt Instrument, Face Amount				$ 5,000,000													$ 1,000,000	$ 1,000,000	$ 1,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share)																	$ 1.30	$ 1.30
Senior Notes [Member] | Initial Notes [Member]
Debt Instrument, Face Amount				3,000,000
Senior Notes [Member] | Additional Notes [Member]
Debt Instrument, Face Amount				$ 1,000,000
Senior Notes [Member] | Partners For Growth VL.P. [Member] | PFG V Debt [Member]
Non-Cash Interest Expense, Debt						11,000		$ 7,000			53,000	$ 3,000
Line of Credit [Member] | Mitsui Sumitomo Bank [Member]
Long-term Line of Credit, Total						$ 0					$ 0		$ 0

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Note 5 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Income Tax Examination, Penalties and Interest Accrued, Total	$ 0		$ 0		$ 0
Income Tax Examination, Penalties and Interest Expense, Total	$ 0	$ 0	$ 0	$ 0

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Note 6 - Revenue 1 (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue, Remaining Performance Obligation, Amount	$ 1,900		$ 1,900
Contract with Customer, Liability, Revenue Recognized	2,000	$ 2,200	9,100	$ 8,900
Capitalized Contract Cost, Amortization	$ 96	$ 114	$ 440	$ 444

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Note 6 - Revenue 2 (Details Textual) $ in Millions	Jun. 30, 2021 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 1.9
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Revenue, Remaining Performance Obligation, Amount	$ 3.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month)	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01
Revenue, Remaining Performance Obligation, Amount	$ 7.9
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month)	12 months

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Note 6 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues	$ 8,661	$ 7,917	$ 26,537	$ 24,599
Hardware [Member]
Revenues	1,702	1,708	4,842	4,536
Software [Member]
Revenues	937	1,020	2,515	2,867
Shipping [Member]
Revenues	20	16	49	209
Product and Other [Member]
Revenues	2,659	2,744	7,406	7,612
Service Support [Member]
Revenues	1,762	2,341	5,644	7,406
Service Hosting [Member]
Revenues	2,023	1,705	6,442	4,820
Service Events [Member]
Revenues	1,745	893	5,031	4,317
Service Installs and Training [Member]
Revenues	472	234	2,014	444
Service [Member]
Revenues	6,002	5,173	19,131	16,987
Intersegment Eliminations [Member]
Revenues	(764)	(560)	(1,949)	(1,351)
Intersegment Eliminations [Member] | Hardware [Member]
Revenues	(297)	(310)	(745)	(507)
Intersegment Eliminations [Member] | Software [Member]
Revenues	(76)	(122)	(332)	(356)
Intersegment Eliminations [Member] | Shipping [Member]
Revenues	0	0	0	0
Intersegment Eliminations [Member] | Product and Other [Member]
Revenues	(373)	(432)	(1,077)	(863)
Intersegment Eliminations [Member] | Service Support [Member]
Revenues	(222)	(128)	(640)	(488)
Intersegment Eliminations [Member] | Service Hosting [Member]
Revenues	(169)	0	(232)	0
Intersegment Eliminations [Member] | Service Events [Member]
Revenues	0	0	0	0
Intersegment Eliminations [Member] | Service Installs and Training [Member]
Revenues	0	0	0	0
Intersegment Eliminations [Member] | Service [Member]
Revenues	(391)	(128)	(872)	(488)
SOFO [Member] | Operating Segments [Member]
Revenues	6,663	6,497	19,471	19,159
SOFO [Member] | Operating Segments [Member] | Hardware [Member]
Revenues	1,635	1,635	4,103	4,244
SOFO [Member] | Operating Segments [Member] | Software [Member]
Revenues	595	707	2,035	2,304
SOFO [Member] | Operating Segments [Member] | Shipping [Member]
Revenues	18	13	45	203
SOFO [Member] | Operating Segments [Member] | Product and Other [Member]
Revenues	2,248	2,355	6,183	6,751
SOFO [Member] | Operating Segments [Member] | Service Support [Member]
Revenues	1,623	1,865	5,122	5,762
SOFO [Member] | Operating Segments [Member] | Service Hosting [Member]
Revenues	1,472	1,358	4,320	3,496
SOFO [Member] | Operating Segments [Member] | Service Events [Member]
Revenues	1,265	702	3,102	2,725
SOFO [Member] | Operating Segments [Member] | Service Installs and Training [Member]
Revenues	55	217	744	425
SOFO [Member] | Operating Segments [Member] | Service [Member]
Revenues	4,415	4,142	13,288	12,408
SFI [Member] | Operating Segments [Member]
Revenues	778	711	2,247	1,833
SFI [Member] | Operating Segments [Member] | Hardware [Member]
Revenues	179	272	522	491
SFI [Member] | Operating Segments [Member] | Software [Member]
Revenues	123	105	343	358
SFI [Member] | Operating Segments [Member] | Shipping [Member]
Revenues	2	3	4	6
SFI [Member] | Operating Segments [Member] | Product and Other [Member]
Revenues	304	380	869	855
SFI [Member] | Operating Segments [Member] | Service Support [Member]
Revenues	159	146	483	437
SFI [Member] | Operating Segments [Member] | Service Hosting [Member]
Revenues	282	145	788	425
SFI [Member] | Operating Segments [Member] | Service Events [Member]
Revenues	32	23	79	97
SFI [Member] | Operating Segments [Member] | Service Installs and Training [Member]
Revenues	1	17	28	19
SFI [Member] | Operating Segments [Member] | Service [Member]
Revenues	474	331	1,378	978
MSKK [Member] | Operating Segments [Member]
Revenues	1,984	1,269	6,768	4,958
MSKK [Member] | Operating Segments [Member] | Hardware [Member]
Revenues	185	111	962	308
MSKK [Member] | Operating Segments [Member] | Software [Member]
Revenues	295	330	469	561
MSKK [Member] | Operating Segments [Member] | Shipping [Member]
Revenues	0	0	0	0
MSKK [Member] | Operating Segments [Member] | Product and Other [Member]
Revenues	480	441	1,431	869
MSKK [Member] | Operating Segments [Member] | Service Support [Member]
Revenues	202	458	679	1,695
MSKK [Member] | Operating Segments [Member] | Service Hosting [Member]
Revenues	438	202	1,566	899
MSKK [Member] | Operating Segments [Member] | Service Events [Member]
Revenues	448	168	1,850	1,495
MSKK [Member] | Operating Segments [Member] | Service Installs and Training [Member]
Revenues	416	0	1,242	0
MSKK [Member] | Operating Segments [Member] | Service [Member]
Revenues	$ 1,504	$ 828	$ 5,337	$ 4,089

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Note 7 - Subsequent Event (Details Textual) - Subsequent Event [Member]	Jul. 28, 2021 USD ($)	Jul. 27, 2021 USD ($) $ / shares shares
Stock Issued During Period, Shares, New Issues (in shares) | shares		945,946
Shares Issued, Price Per Share (in dollars per share) | $ / shares		$ 3.70
Stock Issued During Period, Value, New Issues | $		$ 3,500,000
US Bank [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity | $	$ 3,000,000
Line of Credit Facility, Percent of Qualified Accounts Receivable Included in Borrowing Base	80.00%
Line of Credit Facility, Percent of Qualified Inventory Included in Borrowing Base	50.00%
Line of Credit Facility, Available Over-advance Included in Borrowing Base | $	$ 500,000
Debt Instrument, Covenant, Fixed Charge Coverage Ratio	1.20
Debt Instrument, Covenant, Senior Cash Flow Coverage Ratio	3.00
Debt Instrument, Maturity Date	Jul. 28, 2022
US Bank [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.35%
Board of Directors Chairman [Member]
Stock Issued During Period, Shares, New Issues (in shares) | shares		337,838
Stock Issued During Period, Value, New Issues | $		$ 1,250,000
Warrant Agreements Associated with July 2021 Stock Issuance [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) | shares		141,892
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares		$ 5.50
Warrant Agreements Associated with July 2021 Stock Issuance [Member] | Board of Directors Chairman [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) | shares		50,676