Edgar Filing: SONIC FOUNDRY INC

As filed with the Securities and Exchange Commission on February 25, 2002
Registration No. _______________

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

_________________

SONIC FOUNDRY, INC.
(Exact Name of Registrant as specified in its charter)

Maryland 39-1783372
(State of Incorporation) (I.R.S. Employer Identification No.)

1617 Sherman Avenue
Madison, WI 53704
(608) 256-3133

(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

RIMAS BUINEVICIUS
Chairman and Chief Executive Officer
1617 Sherman Avenue
Madison, WI 53704
(608) 256-3133

(Name, address, including zip code, and telephone number, including area
code, of agent for service)

Copies to:
Frederick H. Kopko, Jr., Esq.
McBreen & Kopko
20 N. Wacker Dr., Suite 2520
Chicago, IL 60606

_________________

Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. [__]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [_] ______________

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

CALCULATION OF REGISTRATION FEE

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Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Share (1) Price (1) Registration Fee
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Common Stock $.01 par 105,485 $2.39 $ 252,109 $ 23.19
value
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Common Stock $.01 par 3,635,204 $2.39 $ 8,688,138 $ 799.30
value, underlying
notes (2)

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Common Stock $.01 par
value, underlying 1,278,270 $2.39 $ 3,055,065 $ 281.06
Warrants (3)
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Total 5,018,959 $11,995,312 $1,103.55
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the high and low sales
price, as reported on the NASDAQ National Market, on February 21, 2002.

(2) Represents the number of shares of common stock issuable upon conversion of
certain subordinated indebtedness.

(3) Represents the number of shares of common stock issuable upon exercise of
certain warrants.

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective, on such date as the Commission, acting pursuant to Section 8(a), may
determine.

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

PROSPECTUS

SONIC FOUNDRY, INC.
5,018,959 Shares of Common Stock, Par Value $.01 per Share

This prospectus is part of a registration statement that covers 5,018,959 shares
of our Common Stock (the "Shares"), consisting of (i) 3,635,204 Shares that may
be issued upon the conversion, in full or in part, of $7.13 million in 10%
convertible subordinated debt we issued in January and February, 2002, including
727,041 shares reserved for potential anti-dilution adjustments, if necessary;
(ii) 1,278,270 Shares issuable upon exercise of certain warrants related to the
convertible debt; and (iii) 105,485 Shares that we have issued to Carnegie
Mellon University as a license fee payment. These Shares may be offered and sold
from time to time by certain of our stockholders (the "Selling Stockholders").
We will not receive any of the proceeds from the sale of the Shares.

The Selling Stockholders may sell the Shares from time to time on the
Nasdaq National Market in regular brokerage transactions, in transactions
directly with market makers or in certain privately negotiated transactions. See
"Plan of Distribution." Each Selling Stockholder has advised us that no sale or
distribution other than as disclosed herein will be effected until after this
Prospectus shall have been appropriately amended or supplemented, if required,
to set forth the terms thereof. We will not receive any proceeds from the sale
of the Shares by the Selling Stockholders. Selling commissions, brokerage fees,
any applicable stock transfer taxes and any fees and disbursements of counsel to
the Selling Stockholders are payable individually by the Selling Stockholders.

Our Common Stock is quoted on the Nasdaq National Market under the
symbol "SOFO". On February 21, 2002, the average of the high and low price for
the Common Stock was $2.39 per share.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

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The date of this Prospectus is February 25, 2002

WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements and other documents with the
Securities and Exchange Commission. You may read and copy any document we file
at the SEC's public reference room at Judiciary Plaza Building, 450 Fifth
Street, N.W., Room 1024 Washington, D.C. 20549. You should call 1-800-SEC-0330
for more information on the public reference room. Our SEC filings are also
available to you on the SEC's Internet site at http://www.sec.gov.

This prospectus is part of the registration statement and does not
contain all of the information included in the registration statement. Whenever
a reference is made in this prospectus to any contract or other document of
Sonic Foundry, the reference may not be complete and you should refer to the
exhibits that are a part of the registration statement for a copy of the
contract or document.

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to "incorporate by reference" into this prospectus
information that we file with the SEC in other documents. This means that we can
disclose important information to you by referring to other documents that
contain that information. The information incorporated by reference is
considered to be part of this prospectus, and information that we file with the
SEC in the future and incorporate by reference will automatically update and may
supersede the information contained in this prospectus. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the sale of all the shares covered by this prospectus.

- Our Quarterly Report on Form 10-Q for our first fiscal quarter
ended December 31, 2001;

- Our Annual Report on Form 10-K/A for the fiscal year ended
September 30, 2001;

- Our Current Reports on Form 8-K filed on October 30, 2001, January
31, 2002 and February 15, 2002 and our current report on Form 8-K/A
filed on December 21, 2001.

- All of our filings pursuant to the Exchange Act after the date of
the filing of the initial registration statement and prior to the
effectiveness of the registration statement; and

- The description of our common stock contained in our Exchange Act
Registration Statement on Form 8-A, filed on April 20, 2000.

You may request free copies of these filings by writing or telephoning
us at the following address: Investor Relations, 1617 Sherman Avenue, Madison,
Wisconsin 53704, Telephone (608) 256-3133.

FORWARD-LOOKING INFORMATION

This prospectus contains or incorporates forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. You can identify these forward-looking statements by our use of
the words "believes", "anticipates", "plans",

"expects", "may", "will", "would", "intends", "estimates" and similar
expressions, whether in the negative or affirmative. We cannot guarantee that we
actually will achieve these plans, intentions or expectations. Actual results or
events could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements we make. We have included important
factors in the cautionary statements in this prospectus, particularly under the
heading "Risk Factors", that we believe could cause our actual results to differ
materially from the forward-looking statements that we make. The forward-looking
statements do not reflect the potential impact of any future acquisitions,
mergers or dispositions. We do not assume any obligation to update any
forward-looking statement we make.

SUMMARY OF THE BUSINESS

Company Overview

Sonic Foundry(R), Inc. was founded in 1991, incorporated in Wisconsin
in March 1994 and merged into a Maryland corporation of the same name in October
1996. We conduct our business through Sonic Foundry, Inc. and three
subsidiaries: Sonic Foundry Media Services, Inc., International Image Services,
Inc. d/b/a Sonic Foundry Media Services and Sonic Foundry Media Systems, Inc.
f/k/a Sonic Foundry Systems Group, Inc., which was created as the result of an
acquisition completed in October 2001. Our executive offices are located at 1617
Sherman Avenue, Madison, Wisconsin, 53704 and our telephone number is (608)
256-3133. Our corporate website is http://www.sonicfoundry.com.
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Our Media Software division writes software code and develops solutions
for the creation, manipulation, and delivery of digital media. Sonic Foundry's
digital audio and video software tools include the award-winning ACID(TM), Sound
Forge(R), Vegas(R) Audio, Vegas(R) Video, VideoFactory(TM), Stream Anywhere(TM),
SIREN(TM) Jukebox, Viscosity(TM), and a variety of compatible music loop
libraries and DirectX Audio Plug-Ins.

Our Media Services division incorporates our existing technology and a
wide array of audio and video signal processing algorithms, including our
unreleased proprietary automation tools. Primary services include translating
analog or digital tapes, CDs, films and other audio and video media into various
compression and Internet streaming file formats, including multiple compression
rates. Add-on services involve cleaning or filtering recordings for improved
quality. In addition, we are one of North America's leading suppliers of
technical services to the television program distribution market. These services
include a number of preprocessing algorithms and technologies used for standards
conversions as well as improving analog to digital conversions.

Our Media Systems division was formed on October 15, 2001, when our
wholly owned subsidiary, Sonic Foundry Media Systems, Inc. acquired the assets
and assumed certain liabilities of MediaSite, Inc., a global pioneer in
providing automated rich media publishing, management and access solutions.
MediaSite derived its core technology from a Carnegie Mellon University research
effort funded by leading government agencies and private corporations.
MediaSite's proven technology (hereafter, the "Media Systems technology ")
provides for the indexing, searching and retrieving of digital media. In
addition, we believe

MediaSite's existing corporate, education and government client base provides
immediate marketing opportunities in the media management area.

RISK FACTORS

Operating History Risks

Our business, financial condition and results of operations have been, and in
the future may be, affected by a variety of factors, including those set forth
below and elsewhere in this prospectus.

We have a history of losses and we may never attain profitability.

We have incurred significant losses since our inception, $49.9 million
in 2001; $34.9 million in 2000; $6.0 million in 1999; and $0.6 million in 1998,
and we may never become profitable. As of December 31, 2001, we had an
accumulated deficit of $139.6 million. We cannot assure you that we will achieve
or maintain profitability in the future.

We have a limited operating history upon which you can evaluate our business and
our future prospects and our operating results will likely fluctuate
significantly.

We were incorporated in March 1994 and we have a limited operating
history and limited financial results upon which you can assess our future
success. We have a very limited history of digital media services operations
upon which you can evaluate our digital media services business model and the
prospects for that business. As a result of our limited operating history and
the rapidly changing nature of the markets in which we compete, our quarterly
and annual revenues and operating results are difficult to predict and may
fluctuate significantly from quarter to quarter and from year to year. You
should therefore not rely upon our revenues and our operating results for any
one quarter or year as an indication of our future revenues or operating
results. Our stock price has been and will in all likelihood continue to be
extremely volatile. You should evaluate our chances of financial and operational
success in light of the risks, uncertainties, expenses and difficulties
frequently encountered by growing companies in new and rapidly evolving markets.

Industry Risks

The market for our products and services is relatively new, and we cannot assure
you that the market will develop as we expect.

Because the market for our products and services is relatively new and
rapidly changing, it is difficult to predict future financial results. Our
research and development and sales and marketing efforts, and business
expenditures are partially based on predictions regarding certain developments
for software products and media services. To the extent that these predictions
prove inaccurate, we may not achieve the level of revenues and operating
expenses that we expect at the time that we expect them and our revenues and
operating expenses may fluctuate.

Our markets are highly competitive, and we may not be able to compete
effectively in our business.

Competition in the markets for digital media software, products and
services is intense. We compete with several companies engaged in the software
and digital media businesses and we expect competition to increase as new
companies enter the market and our current competitors expand their products and
services. This could mean lower prices or reduced demand for our products. Many
of our current and potential competitors have longer operating histories,
greater name recognition, more employees and significantly greater financial,
technical, marketing, public relations and distribution resources than we do,
and we may not be able to successfully compete with them. Any of these
developments would have an adverse effect on our operating results.

Lack of commercial acceptance of, or decreased demand for, complementary
products and technologies developed by third parties may lead to a decreased
demand for our digital media software products and services.

The success of some of our digital media software products and planned
digital media services depends, in part, upon the commercial acceptance of
products, the Internet and technologies developed by other companies that our
digital media software products, services and systems may complement, including
compact disc recorders, Digital Versatile Disc players and compression
technology for streaming or storing media files. These complementary products
help drive the demand for digital media and if businesses and consumers do not
accept these products, the demand for our products, services and systems may
decrease or fail to grow and our business may suffer.

The success of our business depends, in part, upon strategic relationships that
we have with other companies.

Our business depends, in part, upon relationships that we have with
strategic partners such as Microsoft, RealNetworks, Sony, Carnegie Mellon
University and Fraunhofer Institute. We rely, in part, on strategic
relationships to help us:

. maximize the acceptance of our products by customers through
distribution arrangements;

. increase the amount and availability of compelling media content on
the Internet to help boost demand for our products and services;

. increase awareness of our Sonic Foundry and MediaSite brands; and

. increase the performance and utility of our products and services.

We would be unable to realize many of these goals without the
cooperation of these partners. We anticipate that the efforts of our strategic
partners will become more important as the availability and use of multimedia
content on the Internet increases. For example, we may

become more reliant on strategic partners to provide multimedia content, provide
more secure and easy-to-use electronic commerce solutions and build out the
necessary infrastructure for media delivery. The loss of these strategic
relationships, the inability to find other strategic partners or the failure of
our existing relationships to achieve meaningful positive results could harm our
business.

We rely upon a number of distributors to increase our market penetration
domestically and internationally.

We rely upon 30 distributors in 30 countries to sell and market our digital
media software products internationally. We generally do not have contracts with
these distributors. If these distributors were to cease the sale and marketing
of our products, our international sales may decrease.

We have contracts with Navarre Corporation, and other U.S. companies, that
distribute our software products to various computer resellers, value-added
resellers, catalog distributors and smaller retail outlets. Our contracts with
these distributors require us to accept the return of any of our products that
they do not sell and to credit them for the value of these products. Our
contracts also protect certain distributors for the value of inventory in the
event that we lower our prices. If these distributors fail to continue to carry
our products, return large quantities of our products to us, or competitive
pressures require us to lower the prices of the products that we supply to them,
our business will suffer.

The growth of our business depends upon the increased use of the Internet or
convergence of TV and Internet, for communications, commerce and advertising.

The growth of our business depends upon the continued growth of the
Internet as a medium for communications. The Internet may not be accepted as a
viable commercial medium for broadcasting digital and multimedia content or
digital media delivery for a number of reasons, including:

. potentially inadequate development of the necessary infrastructure to
accommodate growth in the number of users and Internet traffic;

. unavailability of compelling multimedia content; and

. delays in the development or adoption of new technological standards
and protocols or increased governmental regulations, which could
inhibit the growth and use of the Internet.

In addition, we believe that other Internet-related issues, including
security of transactions, reliability of data transmission, cost and ease of
use, are not fully resolved and may affect the amount of business that is
conducted over the Internet.

Technology Risks

We depend upon access to Microsoft software codes to develop our digital media
software products.

Quick access to Microsoft's software codes enables us to develop Microsoft
Windows-based software products in a timely manner. Although, in the past,
Microsoft consistently has given us quick access to its software codes,
Microsoft is under no obligation to do so and may refuse us this access in the
future at its discretion. If we do not continue to receive quick access to
Microsoft's software codes, the development of our software products will be
delayed and our business may suffer.

Sonic Foundry Media Systems' core technology is dependent on licensed technology
from Carnegie Mellon University.

As part of the MediaSite transaction we assumed a License Agreement
pursuant to which Carnegie Mellon granted MediaSite a worldwide, nonexclusive
license to use certain technology. Carnegie Mellon re-negotiated the License
Agreement with us and in December 2001, we executed an Amended License
Agreement. The Amended License Agreement provides us with an exclusive license
as to certain defined competitors and their successors in interest. Because the
exclusivity is limited to a defined list of competitors, a risk exists that
Carnegie Mellon could license the technology to another party, that is not
current a named competitor, but could become competitive with us. Moreover, if
the License Agreement were to terminate, our business, results of operations and
prospects would be adversely affected.

We may not be successful in our attempts to keep pace with rapid technological
change and evolving industry standards.

The markets for digital media products and digital media services are
characterized by rapidly changing customer requirements, evolving technologies
and industry standards, and frequent new product and service introductions. Our
future success will depend, in part, upon our ability to:

. use leading technologies effectively;
. enhance our current software products and services;
. identify, develop, and market new software products and service
opportunities; and
. influence and respond to emerging industry standards and other
technological changes.

We must accomplish these objectives in a timely and cost-effective manner.
We have experienced development delays and cost overruns in our development
efforts in the past and we may encounter such problems in the future. Delays and
cost overruns could affect our ability to respond to technological changes,
evolving industry standards, competitive developments or customer requirements.
Our products also may contain undetected errors that could cause increased
development costs, loss of revenues, adverse publicity and reduced market
acceptance of those products or lawsuits by customers. If we fail to develop
products that achieve widespread market acceptance or that fail to generate
significant revenues to offset development

costs, our business and operating results would suffer. We may not timely and
successfully identify, develop and market new product and service opportunities.
If we introduce new products and services, they may not attain broad market
acceptance or contribute meaningfully to our revenues or profitability. Any of
these developments would have an adverse effect on our operating results.

Demand for our digital media software products might decrease or fail to grow if
commercial acceptance of the Microsoft Windows computer operating system
declines.

Our digital media software products work exclusively on the Microsoft
Windows computer operating system. Some of our competitors offer products for
the Apple Macintosh and other computer operating systems. If the Macintosh
computer operating system, which is popular with many musicians and
videographers, or other competing operating systems, including Linux and Java,
were to become dominant in the marketplace at the expense of the Microsoft
Windows computer operating system, demand for our digital media software
products may decrease or fail to grow. Moreover, if we were unable to adapt our
current digital media software products or develop new digital media software
products in a timely and cost-effective manner to work on these different
operating systems, our business might suffer.

Development of new standards for the electronic delivery of digital media could
significantly affect our growth and the way we do business.

The onset of competing industry standards for the electronic delivery of
digital media could slow the growth of our business or force us to adjust the
way in which we do business. If standard delivery technology does not achieve
widespread commercial acceptance and we are unable to adapt our digital media
software products accordingly in a timely and cost-effective manner, our
business may suffer.

Our business will suffer if our systems fail or become unavailable.

A reduction in the performance, reliability and availability of our website
and network infrastructure will harm our ability to market and distribute our
products and services to our users, as well as our reputation and ability to
attract and retain users, customers, advertisers and content providers. Our
systems and operations could be damaged or interrupted by fire, flood, power
loss, telecommunications failure, Internet breakdown, earthquake and similar
events. Our systems are also subject to break-ins, sabotage, intentional acts of
vandalism and similar misconduct. We do not have fully redundant systems or a
formal disaster recovery plan, and we do not carry adequate business
interruption insurance to compensate us for losses that may occur from a system
outage.

Our electronic commerce and digital distribution activities are managed by
sophisticated software and computer systems. We are in the process of
integrating our enterprise resource planning system, which handles all of our
accounting, operations, sales and information systems at business units acquired
last year. We may encounter delays in adopting this or other systems that we
use. Furthermore, these systems may contain undetected errors that could cause
the systems to fail. Any system error or failure that causes interruption in
availability of products or

content or an increase in response time could result in a loss of potential or
existing business services customers. If we suffer sustained or repeated
interruptions, our products, services and website could be less attractive and
our business may suffer.

A sudden and significant increase in traffic on our website could strain
the capacity of the software, hardware and telecommunications systems that we
deploy or use. This could lead to slower response times or system failures. We
depend on Web browsers, ISPs and online service providers to provide Internet
users access to our website. Many of these providers have experienced
significant outages in the past, and could experience outages, delays and other
difficulties due to system failures unrelated to our systems.

Intellectual Property Risks

We may not be successful in protecting our intellectual property and proprietary
rights.

Our inability to protect our proprietary rights, and the costs of doing so,
could harm our business. Our success and ability to compete partly depends on
the superiority, uniqueness or value of our technology, including both
internally developed technology and technology licensed from third parties. To
protect our proprietary rights, we rely on a combination of trademark, patent,
copyright and trade secret laws, confidentiality agreements with our employees
and third parties and "shrink wrap" licenses. Recently, we have undertaken
additional efforts to identify which of our proprietary processes and algorithms
may be patentable, and we currently have several patent applications pending
with the U.S. Patent and Trademark Office. There can be no assurances that we
will ultimately receive issued patents as a result of any of these applications,
or to the extent that we do, that we can always afford to enforce them.

Despite our efforts to protect our proprietary rights, unauthorized parties
may copy or infringe aspects of our technology, products, services or
trademarks, or obtain and use information we regard as proprietary. In addition,
others may independently develop technologies that are similar or superior to
ours, which could reduce the value of our intellectual property.

Companies in the computer industry have frequently resorted to litigation
regarding intellectual property rights. We may have to litigate to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of other parties' proprietary rights. From time to time,
other parties' proprietary rights, including patent rights, have come to our
attention and on several occasions we have received notice of claims of
infringement of other parties' proprietary rights, and we may receive such
notices in the future.

Our intellectual property may infringe the rights of others.

Because we have historically protected our proprietary rights with a
combination of trademark, copyright and trade secret laws, confidentiality
agreements with our employees and third parties and "shrink wrap" licenses and
only recently have begun to apply for patents, our intellectual property may
unintentionally infringe upon the proprietary rights of others. If a third
party's claim of intellectual property right infringement were to prevail, we
could be forced to

pay damages, comply with injunctions, or halt distribution of our products while
we re-engineer them or seek licenses to necessary technology, which might not be
available on reasonable terms. We could also be subject to claims for
indemnification resulting from infringement claims made against our customers
and strategic partners, which could increase our defense costs and potential
damages. In addition, we have agreed to indemnify certain distributors and
original equipment manufacturers, or OEMs, for infringement claims of other
parties. If these other parties sue the distributors or OEMs, we may be
responsible for defending the lawsuit and for paying any judgment that may
result. Any of these events could harm our business.

We may be unable to retain technology licensed or obtained from third parties
and strategic partners.

We rely upon licenses from third parties and strategic partners for
some of our technologies. These companies that license the technologies to us
may decide to discontinue the licenses at any time. If they do so, our business
may suffer.

Further, the Internet and software industries have experienced substantial
consolidation and a proliferation of strategic transactions. We expect this
consolidation and strategic partnering to continue. Acquisitions or strategic
relationships could harm us in a number of ways. For example:

. Our competitors could acquire or form partnerships with companies with
which we have strategic relationships and discontinue our relationship,
resulting in the loss of distribution opportunities for our products and
services or the loss of certain enhancements or value-added features to
our products and services; or

. A party with significant resources and experience could acquire a
competitor of ours, increasing the ability of the competitor to compete
with our products and services.

Management Risks

Our business could suffer if we lose the services of key personnel.

Our success depends in significant part upon a number of key management
and technical employees. The loss of the services of one or more key employees,
particularly Rimas Buinevicius, our Chairman of the Board and Chief Executive
Officer, Monty Schmidt, our President, and Curtis Palmer, our Chief Technology
Officer, could seriously impede our success. Although we have employment
agreements with each of these individuals, a state court may determine not to
enforce, or to only partially enforce, these agreements. We do not have
employment agreements with any other of our key employees. Our success also
depends upon our ability to retain highly skilled technical, managerial,
marketing, and customer service personnel. Competition for highly skilled
personnel is intense. Our failure to retain these personnel could adversely
affect our business. In addition, due to the recent significant drop in our
stock price, our ability to attract and retain experienced employees may be
reduced.

Risks Associated With Acquisitions

We may pursue acquisitions and investments that could adversely affect our
business.

If we identify an acquisition candidate, we may not be able to
successfully negotiate or finance the acquisition or integrate the acquired
businesses, products or technologies into our existing business and products.
Future acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt and contingent liabilities, amortization
expenses or write-downs of acquired assets including goodwill and other
intangible assets. Other than the Digital Savant transaction, we currently have
no commitments or agreements with respect to any business acquisitions or
investments.

Our acquisition of the assets of Digital Savant, Inc. involves risks.

On February 6, 2002, the Company, through its wholly-owned subsidiary,
Sonic Foundry Media Services, Inc. ("SFMS"), announced that it signed a
definitive agreement to acquire certain assets, and the assumption of certain
liabilities, of Digital Savant, Inc. Although SFMS will purchase the assets of
Digital Savant primarily to benefit from its existing customer relationships and
technology, there can be no assurance that revenues from these relationships
will materialize or that competitors won't develop technologies superior to
those acquired. Due to these and other factors, there can be no assurance that
we will obtain benefits from the purchase of the assets of Digital Savant.

In addition, although SFMS purchased only certain scheduled liabilities
of Digital Savant, and in fact obtained indemnification from Digital Savant with
respect to all unscheduled liabilities, it is possible that an unforeseen
liability may arise and result in a claim against SFMS.

Our past and future acquisitions may involve the write down of intangible
assets.

In the first quarter of 2002, the Company adopted new accounting rules
regarding business combinations and the amortization of intangible assets. Under
the new rules, the Company ceased amortizing goodwill and now will annually
assess its carrying value. As of December 31, 2001, the Company recorded a $44.7
million charge associated with reducing goodwill to its current value. See
footnote 1 of the Form 10Q for the three months ended December 31, 2001,
Accounting Pronouncements for further details.

Risks Associated With The Operation Of Our Business

Our international operations involve risks.

We are subject to the normal risks of doing business internationally. These
risks include:

. Unexpected changes in regulatory requirements.

. Export and import restrictions.

. Tariffs and trade barriers and limitations on fund transfers.

. Longer payment cycles and problems in collecting accounts receivable.

. Potential adverse tax consequences.

. Exchange rate fluctuations.

. Increased risk of piracy and limits on our ability to enforce our
intellectual property rights.

Any of these factors could harm our business. We do not currently hedge our
foreign currency exposure.

We may be subject to assessment of sales and other taxes for the sale of our
products, license of technology or provision of services.

We may have to pay past sales or other taxes that we have not collected
from our customers. We do not currently collect sales or other taxes on the sale
of our products, license of technology or provision of services in states and
countries other than Wisconsin. The federal Internet Tax Freedom Act, passed in
1998, imposes a three-year moratorium on discriminatory sales taxes on
electronic commerce, which was recently extended for 2 additional years. We
cannot assure you that this moratorium will be re-extended. Further, foreign
countries or, following the moratorium, one or more states, may seek to impose
sales or other tax obligations on companies that engage in such activities
within their jurisdictions. Our business would suffer if one or more states or
any foreign country were able to require us to collect sales or other taxes from
current or past sales of products, licenses of technology or provision of
services, particularly because we would be unable to go back to customers to
collect sales taxes for past sales and may have to pay such taxes out of our own
funds.

Corporate Governance Risks

Stockholders may be unable to exercise control because our management controls a
large percentage of our stock.

Our directors, officers and affiliated persons own more than 30% of our
common stock and have significant influence over stockholder voting matters. If
our directors, officers and affiliated persons act together, they will be able
to influence the composition of our board of directors, and will continue to
have significant influence over our affairs in general.

Provisions of our charter documents and Maryland law could discourage an
acquisition of our company that would benefit our stockholders.

Provisions of our articles of incorporation and by-laws may make it
more difficult for a third party to acquire control of our company, even if a
change in control would benefit our stockholders. Our articles authorize our
board of directors, without stockholder approval, to

issue one or more series of preferred stock, which could have voting and
conversion rights that adversely affect or dilute the voting power of the
holders of common stock. Furthermore, our articles of incorporation provide for
classified voting, which means that our stockholders may vote upon the retention
of only one or two of our six directors each year. Moreover, Maryland corporate
law restricts certain business combination transactions with "interested
stockholders."

Market Risks

Our stock price has been and may continue to be volatile.

The trading price of our common stock has been and is likely to
continue to be highly volatile. For example, during the 52-week period ended
February 22, 2002, the closing price of our common stock ranged from $1.00 to
$4.44 per share. In addition, the stock market in general, and the market for
technology companies in particular, have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of these companies. These broad market and industry factors may
further reduce our stock price, regardless of our operating performance.

Exercise of outstanding options and warrants will result in further dilution.

The issuance of shares of common stock upon the exercise of our
outstanding options and warrants will result in dilution to the interests of our
stockholders and you as an investor in the Offering, and may reduce the trading
price and market for our common stock.

As of December 31, 2001, we had outstanding options and warrants to
acquire 6,994,967 shares of common stock, 3,601,176 of which are subject to
future vesting. Included in the foregoing are 5,599,741 options which have been
granted under our 1995 Employee Stock Option Plan, our 1999 Non-Qualified Stock
Option Plan and our Non-Employee Director Stock Option Plan, 1,998,565 of which
are immediately exercisable.

To the extent that these stock options or warrants are exercised, the
dilution to the interests of our stockholders and you as an investor will likely
occur. Additional options and warrants may be issued in the future at prices not
less than 85% of the fair market value of the underlying security on the date of
grant. Exercise of these options or warrants, or even the potential of their
exercise or conversion may have an adverse effect on the trading price and
market for our common stock. The holders of our options or our warrants are
likely to exercise them at times when the market price of the common stock
exceeds the exercise price of the securities. Accordingly, the issuance of
shares of common stock upon exercise of the options or our warrants will likely
result in dilution of the equity represented by the then outstanding shares of
common stock held by other stockholders. Holders of our options or our warrants
can be expected to exercise them at a time when we would, in all likelihood, be
able to obtain any needed capital on terms which are more favorable to us than
the exercise terms provided by these options or warrants.

Substantial sales of our common stock could lower our stock price.

The market price for our common stock could drop as a result of sales
of a large number of our presently outstanding shares, or the perception that
these sales could occur. These factors also could make it more difficult for us
to raise funds through future offerings of our common stock.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the Shares by the
Selling Stockholders; all proceeds will go to the Selling Stockholders.

MARKET FOR COMMON EQUITY, DIVIDEND POLICY, AND RELATED
STOCKHOLDER MATTERS

Our common stock was traded on the American Stock Exchange under the
symbol "SFO" since our initial public offering in April of 1998 until April 21,
2000. On April 24, 2000, our common stock began trading on the Nasdaq National
Market under the symbol "SOFO".

The following table sets forth, for the periods indicated, the high and
low sale prices per share of our common stock as reported on the American Stock
Exchange or the NASDAQ National Market. Price per share data and share data set
forth below and otherwise in this prospectus reflect a two-for-one stock split
distributed to stockholders of record on April 7, 2000.

High Low
---------- ---------
Fiscal Year Ended September 30, 1999
First Quarter ................................. 7.44 2.69
Second Quarter ................................ 5.44 3.35
Third Quarter ................................. 10.38 5.07
Fourth Quarter ................................ 6.13 3.94

Fiscal Year Ended September 30, 2000
First Quarter ................................. 12.75 4.25
Second Quarter ................................ 64.97 11.34
Third Quarter ................................. 49.63 9.38
Fourth Quarter ................................ 20.81 5.75

Year Ended September 30, 2001
First Quarter ................................. 8.31 1.09
Second Quarter ................................ 6.00 1.25
Third Quarter ................................. 2.59 1.13
Fourth Quarter ................................ 2.40 1.10

Fiscal Year Ending September 30, 2002
First Quarter ................................. 4.44 1.00
Second Quarter (through February 22, 2002) .... 3.27 2.25

The last traded price on February 21, 2002 for our common stock was
$2.32. The quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not necessarily represent actual transactions.

The Company has not paid any cash dividends and does not intend to pay
any cash dividends in the foreseeable future.

At February 22, 2002 there were 374 common stockholders of record. Many
shares are held by brokers and other institutions on behalf of stockholders and
are therefore not included in these numbers.

SELLING STOCKHOLDERS

In January and February 2002, we closed on a $7,125,000 offering of
convertible subordinated debt with several investors which were primarily
institutional investors (the "Offering"). The promissory notes issued (the
"Notes" and each a "Note") bear interest at 10% per annum and are each
convertible into shares of Company stock at a fixed rate of $2.45, subject to
certain anti-dilution adjustments. The investors also received warrants (the
"Warrants" and each a "Warrant") to purchase shares of common stock at a strike
price of $2.94. As part of the Offering, the Company is required to register
shares equal to an additional 25% of the total shares that the Notes could
currently be converted into.

We have also issued 105,485 shares to Carnegie Mellon University
("CMU"), which are not related to the Offering. The Shares issued to CMU relate
to an obligation the Company assumed, as part of a purchase transaction we
recently completed with MediaSite, Inc. for past due royalties owed by
MediaSite.

This Prospectus covers the 4,798,474 Shares that may become issuable
upon conversion of the Notes and exercise of the Warrants, 115,000 additional
shares that are issuable upon exercise of certain other Warrants in connection
with the Offering, and 105,485 Shares that were issued to CMU.

The following table sets forth certain information as of February 21,
2002 with respect to the Selling Stockholders.

Pursuant to the Offering agreements, we agreed to file a registration
statement covering the Shares underlying the Notes and Warrants.

NUMBER OF PERCENT OF CLASS
COMMON SHARES NUMBER OF SHARES OWNED AFTER
BENEFICIAL OWNERS BENEFICIALLY OF COMMON STOCK OFFERING (IF OVER
OWNED PRIOR TO INCLUDED IN 1% OF TOTAL
OFFERING OFFERING COMMON STOCK
OUTSTANDING
----------------------------- ------------------ ------------------ ------------------

PURCHASERS IN THE
OFFERING

Omicron Partners, L.P. (1) 0 2,693,878 (1) 9.1%
Deephaven Private Placement
Trading, LTD 0 505,103 (2) 1.8%
Gryphon Master Fund, L.P. 0 505,103 (3) 1.8%
Quantico Partners, L.P. 0 252,551 (4) --%
Langley Partners, L.P. 0 252,551 (5) --%
OTATO Limited Partnership 0 336,753 (6) 1.2%
AIG DKR Soundshore Private Investors
Holding Fund LTD. 0 168,351 (7) --%
John Feith 50,000 67,347 (8) --%
Herber H. Hertner 0 16,837 (9) --%
Total 4,798,474 15.2%

Additional Warrant Holders
--------------------------
Atwood Capital, Inc.(10) 13,500 57,500 --%
Brighton Capital Ltd (10) 13,500 57,500 --%
Total 115,000 --%
Common Stockholders
-------------------
Carnegie Mellon University 6,599 105,485 --%

(1) Consists of 1,632,653 shares into which the Note is currently
convertible, an additional 408,164 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 653,061 hares which
may be issued upon exercise of the Warrant.
(2) Consists of 306,122 shares into which the Note is currently
convertible, an additional 76,531 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 122,450 shares which
may be issued upon exercise of the Warrant.
(3) Consists of 306,122 shares into which the Note is currently
convertible, an additional 76,531 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 122,450 shares which
may be issued upon exercise of the Warrant.
(4) Consists of 153,061 shares into which the Note is currently
convertible, an additional 38,265 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 61,225 shares which
may be issued upon exercise of the Warrant.
(5) Consists of 153,061 shares into which the Note is currently
convertible, an additional 38,265 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 61,225 shares which
may be issued upon exercise of the Warrant.

(6) Consists of 204,082 shares into which the Note is currently
convertible, an additional 51,021 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 81,650 shares which
may be acquired upon exercise of the Warrant.
(7) Consists of 102,041 shares into which the Note is currently
convertible, an additional 25,510 shares which may be issued upon the
anti-dilution provisions set forth in the Note and 40,800 shares which
may be acquired upon exercise of the Warrant.
(8) Consists of 40,816 shares into which the Note is currently convertible,
an additional 10,204 shares which may be issued upon the anti-dilution
provisions set forth in the Note and 16,327 shares which may be
acquired upon exercise of the Warrant.
(9) Consists of 10,204 shares into which the Note is currently convertible,
an additional 2,551 shares which may be issued upon the anti-dilution
provisions set forth in the Note and 4,082 shares which may be acquired
upon exercise of the Warrant.
(10) Additional warrants issued in connection with the Offering.

PLAN OF DISTRIBUTION

Resales of the Shares by the Selling Stockholders may be made on the
Nasdaq National Market, or in private transactions. The Shares will be offered
for sale on terms to be determined when the agreement to sell is made or at the
time of sale, as the case may be. The Selling Stockholders may sell some or all
of the Shares in transactions involving broker-dealers who may act solely as
agent and or may acquire Shares as principal. Broker-dealers participating in
such transactions as agent may receive commissions from the Selling Stockholders
(and, if they act as agent for the purchaser of such Shares, from such
purchaser), such commissions computed in appropriate cases in accordance with
the applicable rules of NASDAQ, which commissions may be at negotiated rates
where permissible under such rules. Participating broker-dealers may agree with
the Selling Stockholders to sell a specific number of Shares at a stipulated
price per share and, to the extent such broker-dealer is unable to do so acting
as agent, for the Selling Stockholders to purchase as principal any unsold
shares at the price required to fulfill the broker-dealer's commitment to the
Selling Stockholders. Any such sales may be by block trade.

The Selling Stockholders may also engage in short sales, including
short sales against the box, puts and calls and other transactions in securities
of the Company or derivatives of Company securities and may sell or deliver
Shares in connection with these trades. The Selling Stockholders may pledge
their Shares to their brokers under the margin provisions of customer
agreements. If a Selling Stockholder defaults on a margin loan, the broker may,
from time to time, offer and sell the pledged Shares.

LEGAL MATTERS

The legality of the issuance of the Shares offered in this prospectus
will be passed upon for the Company by McBreen & Kopko, Chicago, Illinois.
Frederick H. Kopko, Jr., a member of that firm and a director of the Company,
beneficially owns 183,192 shares of our Common Stock and has options and
warrants to purchase 200,000 shares of our Common Stock.

EXPERTS

The financial statements of Somic Foundry, Inc. included in its Annual
Report (Form 10-K) for the year ended September 30, 2001, have been audited by
Ennst & Young LLP, independent auditors, as set forthe in their report included
therein and incorporated herein by reference, and are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.

INFORMATION CONTAINED ONLY IN PROSPECTUS

We have not authorized anyone to give information beyond what is set
forth in this prospectus. Sales of the Shares described in this prospectus are
not directed at anyone in any jurisdiction in which an offer or solicitation of
such securities is not authorized, or in which the person making the offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. The information contained in this prospectus
is correct as of the date of this prospectus. Neither delivery of this
prospectus nor any sale made pursuant to this prospectus shall imply that the
information contained in this prospectus is correct as of any time after the
date of this prospectus.

Table of Contents

Where You Can Find More Information ......................................... 1
Information Incorporated by Reference ....................................... 2
Forward Looking Information ................................................. 2
Summary of the Business ..................................................... 3
Risk Factors ................................................................ 4
Use of Proceeds ............................................................. 14
Market for Common Equity, Dividend Policy, and Related
Stockholder Matters ......................................................... 14
Selling Stockholders ........................................................ 15
Plan of Distribution ........................................................ 17
Legal Matters ............................................................... 17
Experts ..................................................................... 18
Information Contained Only in Prospectus .................................... 18

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered hereby. Normal commission expenses and brokerage fees are payable
individually by the Selling Stockholders. All amounts are estimated except the
Securities and Exchange Commission registration fee.

SEC registration fee ........................................... $ 1,103.55

Legal fees and expenses ........................................ $15,000.00

Accounting fees and expenses ................................... $10,000.00

Total .......................................................... $26,103.55
==========

Item 15. Indemnification of Directors and Officers.

Our Articles of Incorporation limit the liability of our directors, in
their capacity as directors but not in their capacity as officers, to the
fullest extent permitted by the Maryland General Corporation Law, or MGCL.
Accordingly, pursuant to the terms of the MGCL as presently in effect, we may
indemnify any director unless it is established that:

- the act or omission of the director was material to the matter
giving rise to the proceeding and was committed in bad faith or was
the result of active and deliberate dishonesty;

- the director actually received an improper personal benefit in
money, property or services;

- or in the case of any criminal proceeding, the directors had
reasonable cause to believe that the act or omission was unlawful.

In addition, our Bylaws require us to indemnify each person who is or
was, a director, officer, employee or agent of ours to the fullest extent
permitted by the laws of the State of Maryland in the event he is involved in
legal proceedings by reason of the fact that he is or was a director, officer,
employee or agent of ours, or is or was serving at our request as a director,
officer, employee or agent of another corporation, partnership or other
enterprise. We may also advance to such persons expenses incurred in defending a
proceeding to which indemnification might apply, upon terms and conditions, if
any, deemed appropriate by the Board of Directors upon receipt of an undertaking
by or on behalf of such director or officer to repay all such advanced amounts
if it is ultimately determined that he is not entitled to be indemnified as

II-1

authorized by the laws of the State of Maryland. In addition, we carry director
and officer liability insurance

In connection with this offering, certain of the Selling Stockholders
have agreed to indemnify us, our directors and officers and each such person who
controls us, against any and all liability arising from inaccurate information
provided to us by the Selling Stockholders and contained herein.

Item 16. Exhibits.

Exhibit Number Description of Document
-------------- -----------------------

2.1(1) Purchase Agreement dated January 25, 2002 by and between
Sonic Foundry, Inc. and Omicron Partners, L.P.

2.2(1) Note - Exhibit A to Purchase Agreement

2.3(1) Warrant - -Exhibit B to Purchase Agreement

2.4(1) Registration Rights Agreement - Exhibit C to Purchase
Agreement

4.1(2) Amended and Restated Articles of Incorporation (2).

4.2(2) Amended and Restated By-Laws (2).

4.3(2) Specimen Common Stock Certificate.

5.1 Opinion of McBreen & Kopko, regarding the legality of the
securities.

23.1 Consent of McBreen & Kopko (see Exhibit 5.1).

23.2 Consent of Ernst & Young LLP.

24.1(4) Power of Attorney (see page II-4).

-------------------
(1) Incorporated by reference from Form 8-K, filed on January 31, 2002.
(2) Incorporated by reference from Registration Statement No. 333-46005 on Form
SB-2 filed on February 10, 1998.

II-2

Item 17. Undertakings.

1. The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;

(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.

Provided, however, that the undertakings set forth in
paragraphs (1)(i) and (1)(ii) above shall not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to the Securities
Exchange Act of 1934 that are incorporated by reference in
the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-3

2. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

3. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on to Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Madison, State of Wisconsin, on February 25, 2002.

SONIC FOUNDRY, INC.

By:
/s/ Rimas Buinevicius
------------------------------------------
Rimas P. Buinevicius, Chairman, Chief Executive Officer
and Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Rimas P. Buinevicius and Kenneth
A. Minor, jointly and severally, his or her true and lawful attorneys-in-fact,
each with full power of substitution, for him or her in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange

II-4

Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done or by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
amendment no. 1 to registration statement has been signed by the following
persons in the capacities and on the dates indicated.

Signature Title
Date

/s/ Rimas P. Buinevicius Chief Executive Officer and Chairman
---------------------------
Rimas P. Buinevicius
February 25, 2002

/s/ Monty R. Schmidt President and Director
---------------------------
Monty R. Schmidt
February 25, 2002

/s/ Curtis J. Palmer Chief Technology Officer and Director
---------------------------
Curtis J. Palmer
February 25, 2002

/s/ Kenneth A. Minor Chief Financial Officer and Secretary
---------------------------
Kenneth A. Minor
February 25, 2002

/s/ Frederick H. Kopko, Jr. Director
---------------------------
Frederick H. Kopko, Jr.
February 25, 2002

/s/ Rimas P. Buinevicius* Director
---------------------------
Arnold B. Pollard
February 25, 2002

/s/ Rimas P. Buinevicius* Director
---------------------------
David C. Kleinman
February 25, 2002

*Pursuant to Power of Attorney

II-5

Exhibit Index

Exhibit Number Description of Document
-------------- -----------------------

2.1(1) Purchase Agreement dated January 25, 2002 by and between
Sonic Foundry, Inc. and Omicron Partners, L.P.

2.2(1) Note - Exhibit A to Purchase Agreement

2.3(1) Warrant - Exhibit B to Purchase Agreement

2.4(1) Registration Rights Agreement - Exhibit C to Purchase
Agreement

4.1(2) Amended and Restated Articles of Incorporation (2).

4.2(2) Amended and Restated By-Laws (2).

4.3(2) Specimen Common Stock Certificate.

5.1 Opinion of McBreen & Kopko, regarding the legality of the
securities.

23.1 Consent of McBreen & Kopko (see Exhibit 5.1).

23.2 Consent of Ernst & Young LLP.

24.1 Power of Attorney (see page II-4).