Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A No. 1
(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal period ended September 30, 2018
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 W. Washington Ave, Madison, WI 53703
 
(608) 443-1600
(Address of principal executive offices)
 
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common stock par value $0.01 per share
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.    Yes  ¨  No  ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes  ¨  No  ý
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  ý    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    Yes  ý    No  ¨

1

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ý    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
 
x
 
 
 
 
 
 
 
 
 
 
 
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.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý
The aggregate market value of the registrant’s common stock held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter was approximately $8,661,176.
The number of shares outstanding of the registrant’s common equity was 5,278,778 as of March 12, 2019.




























2

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A amends the Sonic Foundry, Inc. (“Sonic Foundry” or the “Company”) Annual Report on Form 10-K for the fiscal year ending September 30, 2018, as filed with the Securities and Exchange Commission (“SEC”) on March 15, 2019 (the “Original Filing”). We are filing this Amendment No. 1 to include the information required by Part III of Form 10-K that was not included in the Original Filing, as we do not anticipate filing our definitive proxy statement within 120 days after the end of our fiscal year ended September 30, 2018. As required by Rule 12b-15 under the Securities Exchange Act of 1934, new certificates of our principal executive officer and principal financial officer are being filed as exhibits to this Amendment No. 1 on Form 10-K/A.
Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing.

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Our executive officers, directors and key employees are as follows:
Name
 
Age
 
Position
Gary R. Weis
 
71
 
Chief Executive Officer, Chief Technology Officer and Director
Michael Norregaard
 
57
 
Chief Operating Officer (Appointed March 2019)
Kenneth A. Minor
 
57
 
Chief Financial Officer and Secretary
Robert M. Lipps
 
47
 
Executive Vice President - Sales
Mark D. Burish(2)(3)(4)
 
65
 
Non-Executive Chair and Director
Frederick H. Kopko, Jr.(4)
 
63
 
Director
Nelson A. Murphy(1)
 
58
 
Director
David F. Slayton(1)
 
50
 
Director
Brian T. Wiegand(1)(2)(3)
 
50
 
Director

(1)
Member Audit Committee
(2)
Member Compensation Committee
(3)
Member Nominations Committee
(4)
Member Governance Committee

Gary R. Weis has been Chief Executive Officer since March 2011, Chief Technology Officer since September 2011 and a Director of Sonic since February 2004. Prior to joining Sonic, he served as President, Chief Executive Officer and a Director of Cometa Networks, a wireless broadband Internet access company from March 2003 to April 2004. From May 1999 to February 2003 he was Senior Vice President of Global Services at AT&T where he was responsible for one of the world's largest data and IP networks, serving more than 30,000 businesses and providing Internet access to more than one million individuals worldwide. While at AT&T, Mr. Weis also was CEO of Concert, a joint venture between AT&T and British Telecom. Previously, from January 1995 to May 1999 he was General Manager of IBM Global Services, Network Services. Mr. Weis served as a Director from March 2001 to February 2003 of AT&T Latin America, a facilities-based provider of telecom services in Brazil, Argentina, Chile, Peru and Columbia. Mr. Weis earned BS and MS degrees in Applied Mathematics and Computer Science at the University of Illinois, Chicago.

Michael Norregaard has been Chief Operating Officer since March 2019 and joined the Company in January 2013. During Mr. Norregaard’s tenure with the Company he served in various sales and operations roles including as Vice President of Business Development and Senior Vice President of Sales Operations. From 2007 to January 2013 Mr. Norregaard served as Managing Director / Divisions Director Outsourcing Services for Logica PLC, a multinational IT and management consulting company headquartered in the United Kingdom. Prior to his role with Logica, Mr. Norregaard held various other executive roles in European

3

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


technology companies as well as client manager and sales executive at IBM and general manager at AT&T. Mr. Norregaard has a Bachelor of Business from the Copehagen Business School and a Master of Social Economics from the University of Copenhagen.

Kenneth A. Minor has been our Chief Financial Officer since June 1997, Assistant Secretary from December 1997 to February 2001 and Secretary since February 2001. From September 1993 to April 1997, Mr. Minor was employed as Vice President and Treasurer for Fruehauf Trailer Corporation, a manufacturer and global distributor of truck trailers and related aftermarket parts and service where he was responsible for financial, treasury and investor relations functions. Prior to 1993, Mr. Minor served in various senior accounting and financial positions for public and private corporations as well as the international accounting firm of Deloitte Haskins and Sells. Mr. Minor is a certified public accountant and has a B.B.A. degree in accounting from Western Michigan University.

Robert M. Lipps has been Executive Vice President of Sales since April 2008, joining Sonic Foundry in April 2006 as Vice President of International Sales and assuming expanded responsibility for U.S. central sales in 2007. Mr. Lipps leads the company’s global sales organization including oversight of domestic, international and channel sales. He holds 15 years of sales leadership, business development and emerging market entry expertise in the technology and manufacturing sectors, including sales and channel management.  From January 2004 to March 2006 he served as General Manager of Natural Log Homes LLC, a New Zealand based manufacturer of log homes. From July 1999 to Dec 2002 he served as Latin America Regional Manager of Adaytum, a software publisher of planning and performance management solutions, (acquired by Cognos Software, an IBM Company, in January 2003) and from May 1996 to July 1999 he served as International Sales Manager for Persoft, a software publisher of host access and mainframe connectivity solutions (acquired by Esker software in 1998). Mr. Lipps has a B.S. degree in Marketing from the University of Wisconsin at La Crosse.

Mark D. Burish     has been a director since March 2010 and has served as Non-Executive Chair since April 2011. Mr. Burish is a shareholder of the law firm of Hurley, Burish & Stanton, Madison, WI, which he helped start in 1983. He is the founder and CEO of Our House Senior Living, LLC, Milestone Senior Living, LLC and Milestone Management Services, LLC which he started in 1997. Mr. Burish received his BA degree in communications from Marquette University in 1975 and his JD degree from the University of Wisconsin in 1978.

Frederick H. Kopko, Jr.    served as Sonic Foundry’s Secretary from April 1997 to February 2001 and has been a Director since December 1995. Mr. Kopko is a partner of the law firm of McBreen & Kopko, Chicago, Illinois, and has been a partner of that firm since January 1990. Mr. Kopko practices in the area of corporate law. He is the Managing Director, Neltjeberg Bay Enterprises LLC, a merchant banking and business consulting firm and has been a Director of Mercury Air Group, Inc. since 1992. Mr. Kopko received a B.A. degree in Economics from the University of Connecticut, a J.D. degree from the University of Notre Dame Law School and an M.B.A. degree from the University of Chicago.

Nelson A. Murphy has been a Director since November 2017. Since January 2015, Mr. Murphy has been the Executive VP, Finance & Operations for Catawba College, a private liberal arts college. From August 2013 to June 2015 Mr. Murphy was VP, International Finance at Syniverse Technologies, Inc. in Luxembourg, a provider of mobile technologies, and from October 2010 to August 2013 served as VP - Finance, Defensive Systems Division at Northrop Grumman Corporation, a global security company. Previously, Mr. Murphy served in various senior finance roles at AT&T including responsibility for finance in operations located in Europe, the Middle East and Latin America. Mr. Murphy has a B.S. in Accounting from Wake Forest University.

David F. Slayton has been a Director since November 2017. Since April 2013, Mr. Slayton has been the Chief Financial Officer of Ovative Group, a digital media agency and analytics firm. From July 2008 to March 2013, Mr. Slayton was co-founder, Executive Vice President - CFO and a member of the board of Alice.com, an e-commerce retail marketplace. Prior to his service at Alice.com, Mr. Slayton served in senior financial management roles at numerous companies including as Chief Financial Officer at Shavlik Technologies from June 2005 to July 2008, Managing Director and co-founder at Haviland Partners Inc. from August 2003 to February 2005 and as Chief Financial of NameProtect Inc. from July 2000 to July 2003. Mr. Slayton earned a BS in Economics from the Massachusetts Institute of Technology (June 1991) and an MBA in Business Administration from Harvard University (June 1996).
 
Brian T. Wiegand has been a director of the Company since July 2012, and is a serial entrepreneur who successfully founded and sold several internet-based companies. He is currently the founder and CEO of Gavy, Inc., a live video shopping platform. Mr. Wiegand founded and served as CEO of Hopster, a company that links digital marketing efforts with real-world shopping behavior by rewarding consumer purchase loyalty, engagement and advocacy. Hopster announced in October 2014 that it was acquired by Inmar, Incorporated, where Mr. Wiegand served as SVP of Growth and Strategy from the date of purchase to August 2016. Mr.

4

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


Wiegand co-founded and served as executive chair of the board of Alice.com, an online retail platform that connects manufacturers and consumers in the consumer packaged goods market. Alice.com filed for receivership in August 2013. Mr. Wiegand also co-founded Jellyfish.com, a shopping search engine, in June of 2006. He served as CEO until October 2007 when the company was sold to Microsoft. Mr. Wiegand continued with Microsoft as the General Manager of Social Commerce until May 2008. He also co-founded NameProtect, a trademark research and digital brand protection services company in August 1997 which was sold to Corporation Services Company in March 2007. In addition, Mr. Wiegand founded BizFilings in 1996, the Internet’s leading incorporation Services Company. He served as the president and CEO until 2002 when the company was acquired by Wolters Kluwer. Mr. Wiegand attended the University of Wisconsin - Madison.

When considering whether the Board of Directors and nominees thereto have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focused primarily on the information discussed in each of the Board members' biographical information set forth above. Each of the Company's directors possesses high ethical standards, acts with integrity and exercises careful, mature judgment. Each is committed to employing his skills and abilities to aid the long-term interests of the stakeholders of the Company. In addition, each of our directors has exhibited judgment and skill, and has either been actively involved with the Company for a considerable period of time or has experience with other organizations of comparable or greater size. In particular, Mr. Kopko has had extensive experience with companies comparable in size to Sonic Foundry, including serving as a director of Mercury Air Group, Inc. and fills a valuable need with experience in securities and other business law. Mr. Weis has had experience in both developing and established companies, having served as a CEO and Director of Cometa Networks and in several positions at AT&T and IBM, including Senior Vice President of Global Services. While at AT&T, Mr. Weis also was CEO of Concert, a joint venture between AT&T and British Telecom. Mr. Burish brings additional valuable legal experience to the Board as well as experience obtained through founding multiple companies. Mr. Wiegand has significant experience in founding and operating technology companies and building brand awareness with both businesses and consumers. Mr. Murphy has significant experience in finance and accounting both in the higher education field as well as with technology companies and Mr. Slayton has substantial financial experience in growing technology companies.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires Sonic's officers and directors, and persons who own more than ten percent of the Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely upon a review of Forms 3 and Forms 4 furnished to us pursuant to Rule 16a-3 under the Exchange Act during our most recent fiscal year, to Sonic Foundry's knowledge, all reporting persons complied with all applicable filing requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.

Audit Committee Composition and Expert

Sonic has a standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Members of the Audit Committee are Messrs. Murphy (chair), Slayton and Wiegand. Sonic’s Board of Directors has determined that all members of Sonic’s Audit Committee are “independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act and as defined under Nasdaq listing standards. The Audit Committee provides assistance to the Board in fulfilling its oversight responsibility including: (i) internal and external financial reporting, (ii) risks and controls related to financial reporting, and (iii) the internal and external audit process. The Audit Committee is also responsible for recommending to the Board the selection of our independent public accountants and for reviewing all related party transactions. The Audit Committee met five times in Fiscal 2018. A copy of the charter of the Audit Committee is available on Sonic’s website.

Sonic's Board of Directors has determined that, due to his experience serving in senior financial roles at several companies as well as his degree in accounting and designation as a certified public accountant, Mr. Murphy meets the definition of audit committee financial expert as that term is defined under the rules of the Securities and Exchange Commission. The members of the Audit Committee also meet the Nasdaq Stock Market requirements regarding the financial sophistication and the financial literacy of members of the Audit Committee.

Code of Ethics

Sonic has adopted a Code of Ethics (as defined in Item 406 of Regulation S-K) that applies to its principal executive, financial and accounting officers. Sonic Foundry will provide a copy of its code of ethics, without charge, to any investor who requests it. Requests should be addressed in writing to Mr. Kenneth Minor, Corporate Secretary, 222 West Washington Ave, Madison, WI 53703.

5

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018




ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis
Introduction
This Compensation Discussion and Analysis describes our compensation strategy, policies, programs and practices for the executive officers identified in the Summary Compensation Table. Throughout this proxy statement, we refer to these individuals, who serve as our Chief Executive Officer, Chief Financial Officer and Executive Vice President of Sales as the “Named Executive Officers.”
The Executive Compensation Committee (“Committee”) establishes and oversees our compensation and employee benefits programs and approves the elements of total compensation for the executive officers. The day-to-day design and administration of our retirement and employee benefit programs available to our employees are handled by our Human Resources and Finance Department employees. The Committee is responsible for reviewing these programs with management and approving fundamental changes to them.
Overview and Objectives of our Executive Compensation Program
The compensation program for our executive officers is designed to attract, motivate, reward and retain highly qualified individuals who can contribute to Sonic’s growth with the ultimate objective of increasing stockholder value.   Our compensation program consists of several forms of compensation:  base salary, annual bonus, long-term incentives and limited perquisites and benefits.
Base salary and annual bonus are cash-based while long-term incentives consist of stock option awards. The Committee does not have a specific allocation goal between cash and equity-based compensation or between annual and long-term incentive compensation. Instead, the Committee relies on the process described in this discussion and analysis in its determination of compensation levels and allocations for each executive officer.
The Committee established performance metrics for each of its Named Executive Officers in fiscal 2018 designed to match Company performance to the amount of incentive compensation paid to such officers following completion of the fiscal year.
The recommendations of the Chief Executive Officer play a significant role in the compensation-setting process. The Chief Executive Officer provides the Committee with an annual overall assessment of Sonic’s achievements and performance, his evaluation of individual performance and his recommendations for annual compensation and long-term incentive awards. The Committee has discretion to accept, reject or modify the Chief Executive Officer’s recommendations. The Committee determines the compensation for the Chief Executive Officer in an executive session.

Market Competitiveness

The Committee’s target is for total cash compensation to average between the 50th and 75th percentile of published compensation data derived from two sources: (i) a peer group of companies that are in our industry, competitors for key talent, or with similar financial characteristics; and (ii) published market survey data for companies within our revenue range. The peer group data was obtained from the most recently filed proxy statement of 12 publicly-traded technology companies with annual revenues ranging from approximately $10 million to just under $100 million; market capitalization from approximately $10 million to approximately $200 million and approximately 300 employees or less. The following companies comprised the peer group for the study: Adesto Technologies, Corp, Asure Software Inc., Bsquare Corporation, Datawatch Corp., FalconStor Software Inc., GlobalSCAPE Inc., Glowpoint Inc., GSE Systems Inc., Inuvo Inc., MAM Software Group, Inc., Qumu Corporation and Smith Micro Software Company. Given competitive recruiting pressures, the Committee retains its discretion to deviate from this target under appropriate circumstances. The Committee periodically receives updates of the published compensation data.

Pay for Performance

The Committee believes that both long and short term compensation of executive officers should correlate to Sonic’s overall financial performance.  Incentive payouts will be larger with strong performance and smaller if Sonic’s financial results decline. From time to time, extraordinary Board-approved initiatives in a fiscal year, such as a restructuring, acquisition, or divestiture, are considered by the Committee in its overall evaluation of Sonic’s performance.

Peer Group Analysis


6

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


Compensation data came from a peer group of twelve public companies that we consider similar to our market for sales, or for key talent, or with similar financial or other characteristics such as number of employees. The companies in the peer group are described above.  

Components of Executive Compensation

Base Salary

The Committee seeks to pay the executive officers a competitive base salary in recognition of their job responsibilities for a publicly held company. As noted above, the target compensation range for an executive’s total cash compensation (salary and bonus) is between the 50th and 75th percentile of the market data reviewed by the Committee.

As part of determining annual compensation review, the Committee also considers the Chief Executive Officer’s recommendation regarding individual performance as well as internal equitable considerations.

In evaluating individual performance, the Committee considers initiative, leadership, tenure, experience, skill set for the particular position, knowledge of industry and business, and execution of strategy in placing the individual within the range outlined.

The Committee met on February 1, 2019 for consideration of base wage changes for Messrs. Weis, Minor and Lipps which have been frozen since December 1, 2016. At the recommendation of management, the Committee agreed to reduce compensation for Messrs. Weis and Minor and Lipps. Base wages for Messrs. Weis and Minor were reduced to $350,000 and $250,000 on an annual basis from $489,880 and $301,986, respectively. Base wages for Mr. Lipps were maintained at $242,810 but his incentive compensation was capped at $7,190 on an annual basis. After its review of all sources of market data as described above, the Committee believes that the base salaries and the bonuses described are below its targeted range for total cash compensation.

Annual Performance-Based Variable Compensation
The performance-based variable compensation reported for each executive officer represents compensation that was earned based on incentive plans. The following describes the methodologies used by the Compensation Committee to determine the final annual performance-based variable compensation earned by each executive officer:
Selection of Performance Metrics. For fiscal 2018, the Compensation Committee designed a short-term incentive program (“STIP”) driven by four performance measures that it determined were appropriate to drive desired business behavior for the Company and would correlate positively with total shareholder return. These measures were the Company’s results with respect to (1) customer billings and (2) adjusted EBITDA. Messrs. Weis, Minor and Lipps were included in the plan. Mr. Lipps’ short term incentive plan included a separate component based solely on the level of customer billings achieved.
 
Payout Based on Performance Against Goals. For fiscal 2018 the Company’s performance, as evaluated by the Compensation Committee, lead to the determination that none of the objectives were met with regard to financial performance of the Company and therefore, no incentives were earned under the STIP compensation plan. Total billings - based incentives paid to Mr. Lipps during fiscal 2018 was $68,862. No variable compensation plan was approved for fiscal 2019.

Stock Options

The Committee has a long-standing practice of providing long-term incentive compensation grants to the executive officers. The Committee believes that such grants, in the form of stock options, help align our executive officers’ interests with those of Sonic’s stockholders. All stock options have been granted under our 1995 Stock Option Plan, the 1999 Non-Qualified Plan or the 2009 Stock Incentive Plan (“Employee Plans”). All but the 2009 Stock Incentive Plan are now terminated.

The Committee reviews option grant recommendations by the Chief Executive Officer for each executive officer, but retains full discretion to accept, reject or revise each recommendation.  The Committee’s policy is to grant options on the date it approves them or such other future date as the Committee may agree at the time of approval. The exercise price is determined in accordance with the terms of the Employee Plan and cannot be less than the Fair Market Value, as defined in the Plan, of Sonic’s common stock. The Committee typically grants options once a year, but may grant options to newly hired executives at other times.

In making its determinations, the Committee considers the number of options or shares owned by the executive officers.


7

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


No additional option grants were made to Messrs. Weis, Minor and Lipps following the end of fiscal 2018. At a compensation committee meeting held February 1, 2019, the executive management team proposed cancelling certain vested stock options they held in order to make them available for future employee grants. The impact was to cancel 175,764 options for Mr. Weis and 109,690 options each for Messrs. Minor and Lipps. The committee accepted the management recommendation and authorized cancelation immediately.

Health and Welfare Benefits

Our officers are covered under the same health and welfare plans, including our 401(k) plan, as salaried employees.  

Employment Agreements

The Company has employment agreements with Messrs. Norregaard, Minor and Lipps. Pursuant to such employment agreements, Messrs. Minor and Lipps receive annual base salaries subject to increase each year at the discretion of the Board of Directors. Messrs. Minor and Lipps are also entitled to incidental benefits of employment under the agreements. Each of the employment agreements provides that a cash severance payment be made upon termination, other than for cause, or upon death or disability. In each case, such cash severance is equal to the highest cash compensation paid in any of the last three fiscal years immediately prior to termination. In addition, Messrs. Norregaard, Minor and Lipps will receive immediate vesting of all previously unvested common stock and stock options and have the right to voluntarily terminate their employment, and receive the same severance arrangement detailed above following (i) any “person” becoming a “ beneficial” owner of stock of Sonic Foundry representing 50% or more of the total voting power of Sonic Foundry’s then outstanding stock; or, (ii) Sonic Foundry is acquired by another entity through the purchase of substantially all of its assets or securities; or (iii) Sonic Foundry is merged with another entity, consolidated with another entity or reorganized in a manner in which any “person” is or becomes a “beneficial” owner of stock of the surviving entity representing 50% or more of the total voting power of the surviving entity’s then outstanding stock; and, within two years and ninety days of any such event, Messrs. Norregaard, Minor or Lipps, as the case may be, is demoted without cause or his title, authority, status or responsibilities are substantially altered, their salary is reduced or the principal office is more than 50 miles outside the Madison metropolitan area. Pursuant to the employment agreements, each of Messrs. Norregaard, Minor and Lipps has agreed not to disclose our confidential information and not to compete against us during the term of his employment agreement and for a period of one year thereafter. Such non-compete clauses may not be enforceable, or may only be partially enforceable, in state courts of relevant jurisdictions.

The Company also has an employment agreement with Mr. Weis for his services as Chief Executive Officer and Chief Technology Officer. Pursuant to the terms of the amended and restated employment agreement, Mr. Weis receives an annual base salary subject to increase at the discretion of the Board. Mr. Weis may also receive a performance bonus at the discretion of the Board.
The employment agreement continues in effect until terminated as set forth therein. In the event Mr. Weis’s employment is terminated without cause, as defined in the employment agreement, or in the event his employment is constructively terminated, Mr. Weis will be entitled to receive, in equal bi-weekly installments over a one-year period, compensation equal to one and five hundredths (1.05) multiplied by the highest cash compensation paid to Mr. Weis in any of the last three years immediately prior to his termination. In the event of a Change of Control, as defined in the amended and restated employment agreement, Mr. Weis is entitled to terminate the agreement within one year following such Change of Control, in which event he shall be entitled to receive, in a lump sum payable within thirty days of such termination, compensation equal to two and one-tenth (2.1) multiplied by the highest cash compensation paid to Mr. Weis in any of the last three fiscal years immediately prior to his termination. In any of the above events, (i) all of Mr. Weis’s unvested stock options and stock grants will vest immediately upon termination, and (ii) Mr. Weis will receive health insurance continuation as required by COBRA, salary accrued to the date of termination, and any accrued vacation pay. Mr. Weis has further agreed not to disclose the Company’s proprietary information, and, until one year following the termination of his employment agreement, not to compete with the Company or solicit the Company’s employees. Such non-compete clause may not be enforceable, or may be only partially enforceable, in state courts of relevant jurisdiction.

For illustrative purposes, if Sonic terminated the employment of Mr. Weis (not for cause) on September 30, 2018, Sonic would be obligated to pay $599,275, representing 1.05 times the cash compensation paid Mr. Weis during fiscal 2016 (fiscal year with highest cash compensation in three year period preceding September 30, 2018) and $1,198,550 if Mr. Weis elected to terminate his employment on September 30, 2018, following a change of control as defined in the employment agreement. If Sonic terminated Messrs. Minor, Norregaard and Lipps on September 30, 2018, (not for cause), or if Messrs. Minor, Norregaard and Lipps elected to terminate their employment following a demotion or alteration of duties on September 30, 2018, and a change of control as defined in the employment agreements had occurred, Sonic would be obligated to pay $334,237, $232,186 and $329,018, respectively (based on fiscal 2016 compensation which was the fiscal year with highest cash compensation in three year period

8

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


preceding September 30, 2018 for Messrs. Minor and Lipps and fiscal 2018 for Mr. Norregaard). In addition, any non-vested rights of Messrs. Weis, Minor, Norregaard and Lipps under the Employee Plans, would vest as of the date of employment termination. The value of accelerated vesting of the options under these circumstances would be $122,000 for Mr. Weis, $13,000 for Mr. Norregaard and $67,000 for both Messrs. Minor and Lipps.

Personal Benefits

Our executives receive a limited number of personal benefits certain of which are considered taxable income to them and which are described in the footnotes to the section of this Proxy Statement entitled “Summary Compensation Table ”.

Internal Revenue Code Section 162(m)

Internal Revenue Code Section 162(m) limits the ability of a public company to deduct compensation in excess of $1 million paid annually to each of the Chief Executive Officer and each of the other executive officers named in the Summary Compensation Table. There are exemptions from this limit, including compensation that is based on the attainment of performance goals that are established by the Committee and approved by the Company stockholders. No executive officer was affected by this limitation in fiscal 2018.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of Sonic Foundry has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s 2019 Proxy Statement included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, as amended and filed in a Form 10-K.
Proxy Statement.

COMPENSATION COMMITTEE

Mark D. Burish, Chair
Brian T. Wiegand


9

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


The following table sets forth the compensation of our principal executive officer, our principal financial officer and our other executive officer for the fiscal year ended September 30, 2018.







Name and Principal Position
(a)







Year
(b)






Salary
($)
(c)






Bonus
($)
(d)





Stock Awards
($)
(e)





Option Awards
($)(1)
(f)




Non-Equity Incentive Plan Compensation
($)(2)
(g)
Change in Pension
Value and
Non-qualified Deferred Compensation Earnings
($)
(h)




All Other Compen-
sation
($)(3)
(i)






Total
($)
(j)
 
 
 
 
 
 
 
 
 
 
Gary R. Weis
Chief Executive and Chief Technology Officer
2018
2017
2016
489,880
487,136
475,615
-
-
-
-
-
-
-
89,143
157,350
-
-
95,123
-
-
-
4,304
7,537
9,021
494,184
583,819
737,109
Kenneth A. Minor
Chief Financial Officer and Secretary
2018
2017
2016
301,990
300,298
293,190
-
-
-
-
-
-
-
49,028
76,355
-
-
41,047
-
-
-
17,548
13,826
17,299
319,538
363,152
435,883
Robert M. Lipps
Executive Vice
President - Sales
2018
2017
2016
242,810
241,450
235,739
-
-
-
-
-
-
-
49,028
76,355
68,862
61,997
93,279
-
-
-
8,614
6,149
9,950
320,286
358,624
415,323
(1)
The option awards in column (f) represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for stock options granted during the fiscal year. The assumptions and methodology used in calculating the compensation expense of the option awards are provided in Sonic’s Form 10-K.  See Note 1, “Accounting for Stock Based Compensation” in the Notes to the Consolidated Financial Statements in Sonic’s Form 10-K. The amounts in this column represent value attributed to the awards at the date of grant and not necessarily the actual value that will be realized by the executive. There can be no assurance that the options will ever be exercised (in which case no value will be realized by the executive) or that the value on exercise will equal the ASC Topic 718 value.
(2)
The amounts in column (g) represent cash bonuses which were awarded for performance during the prior fiscal year based on a pre-established formula.
(3)
The amount shown under column (i) for the fiscal year 2018 includes Sonic’s matching contribution under our 401(k) plan of $4,304, $10,398 and $8,614 for Messrs. Weis, Minor and Lipps. Mr. Minor receives $650 per month as a car allowance of which the taxable personal portions were $7,150. Mr. Lipps receives a car allowance of $700 per month of which there was no taxable personal portion. Mr. Weis received car and housing allowances totaling $2,500 per month, of which there was no taxable personal portion.

10

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018



Grants of Plan-Based Awards

The following table shows the plan-based awards granted to the Named Executive Officers during fiscal 2018.

 
 



Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards


Estimated Future Payouts
Under Equity
Incentive
Plan Awards
All other stock awards:
Number of
Shares of stock or units
(#)
(i)
All other option awards:
Number of
Securities
Underlying
Options
(#)
(j)


Exercise or base price of option awards
($/Sh)
(1)
(k)
Grant
Date fair
Value of
Stock and
option
awards
($)
(2)
(l)

Name
(a)
Grant
Date
(b)
Threshold
($)
(c)
Target
($)
(d)
Maximum
($)
 (e)
Threshold
($)
(f)
Target
($)
(g)
Maximum
($)
 (h)
 
 
 
 
 
 
 
 
 
 
 
 
Gary R. Weis
1/17/18
-
-
-
-
-
-
-
92,857
2.49
89,143
Kenneth A. Minor
1/17/18
-
-
-
-
-
-
-
51,071
2.49
49,028
Robert M. Lipps
1/17/18
-
-
-
-
-
-
-
51,071
2.49
49,028

(1)
Sonic grants employee stock options with exercise prices equal to the closing stock price on the date of grant.
(2)
The amount reported in column (l) represents the grant date fair value of the award following the required FASB ASC Topic 718 compensation methodology. Grant date fair value is calculated using the Lattice method. See Note 1, “Accounting for Stock Based Compensation” in the Notes to the Consolidated Financial Statements in Sonic’s Form 10-K for the fiscal year ended September 30, 2018 for an explanation of the methodology and assumptions used in FASB ASC Topic 718 valuation. With respect to the option grants, there can be no assurance that the options will ever be exercised (in which case no value will be realized by the executive) or that the value on exercise will equal the FASB ASC Topic 718 value.

Sonic grants options to its executive officers under our employee stock option plans. As of September 30, 2018, options to purchase a total of 2,029,741 shares were outstanding under the plans, and options to purchase 739,259 shares remained available for grant thereunder.

11

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018



Outstanding Equity Awards at Fiscal Year-End

The following table shows information concerning outstanding equity awards as of September 30, 2018 held by the Named Executive Officers.

 
Option Awards
Stock Awards















Name
(a)







Number
of
Securities Underlying Unexercised Options
(#)
Exercisable
(1)
(b)







Number
of
Securities Underlying Unexercised Options
(#)
Unexercisable
(1)
(c)




Equity Incentive
Plan
Awards:
Number
 of
Securities Underlying Unexercised Unearned Options
(#)
(d)











Option Exercise Price
($)
(1)
(e)













Option Expiration Date
(1)
(f)








Number
of Shares
or Units
of Stock That Have
 Not
Vested
(#)
(g)






Market Value of Shares or Units of Stock
That
Have
Not
Vested
($)
(h)


Equity Incentive Plan Awards:
Number
of
Unearned Shares, Units or Other Rights
That Have
Not
Vested
(#)
(i)
Equity Incentive Plan Awards:
Market or
Payout Value of Unearned Shares, Units or Other Rights
That Have Not
Vested
($)
(j)
Gary R. Weis
5,000*
2,000
2,000
2,000*
50,000*
73,000
61,500*
62,264*
33,716
25,014
92,857
0
0
0
0
0
0
0
0
16,858
50,028
0
None
5.00
5.50
6.90
14.83
8.68
7.80
9.45
9.36
7.17
4.75
2.49
11/3/2018
3/5/2019
3/4/2020
3/3/2021
9/30/2021
10/17/2022
10/28/2023
11/10/2024
11/5/2025
12/27/2026
1/17/2028
 
 
 
 
Kenneth A. Minor
6,000
14,120*
27,500*
40,000
33,825*
34,245*
18,546
13,758
51,071
0
0
0
0
0
0
9,273
27,515
0
None
5.26
15.21
9.46
7.80
9.45
9.36
7.17
4.75
2.49
12/2/2019
11/24/2020
10/24/2021
10/17/2022
10/28/2023
11/10/2024
11/5/2025
12/27/2026
1/17/2028
 
 
 
 
Robert M. Lipps
6,000
14,120*
27,500*
40,000
33,825*
34,245*
18,546
13,758
51,071
0
0
0
0
0
0
9,273
27,515
0
None
5.26
15.21
9.46
7.80
9.45
9.36
7.17
4.75
2.49
12/2/2019
11/24/2020
10/24/2021
10/17/2022
10/28/2023
11/10/2024
11/5/2025
12/27/2026
1/17/2028
 
 
 
 
(1)
All options were granted under either our stockholder approved Employee Stock Option Plans or the Non-Qualified Stock Option Plan. All unexercisable options listed in the table become exercisable over a three-year period in equal annual installments beginning one year from the date of grant.
* Options expired or were cancelled as of the date of this report.

12

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018



Option Exercises and Stock Vested

The following table shows information concerning option exercises in fiscal 2018 by the Named Executive Officers.

 
 
Option Awards
 
Stock Awards
 
 
Number of Shares Acquired on Exercise
(#)
 

Value Realized on Exercise
($)
 
Number of Shares Acquired on Vesting
(#)
 

Value Realized on Vesting
($)
 
 
 
 
 
 
 
 
 
None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Compensation Committee Interlocks and Insider Participation
 
The members of the Executive Compensation Committee of Sonic's Board of Directors for fiscal 2018 were those named in the Executive Compensation Committee Report. No member of the Committee was at any time during fiscal 2018 or at any other time an officer or employee of Sonic Foundry, Inc.
 
No executive officer of Sonic Foundry, Inc. has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of the Board of Directors of Sonic Foundry.



DIRECTORS COMPENSATION

Our directors who are not also our full-time employees, receive an annual retainer of $20,000 in addition to a fee of $1,500 for attendance at each meeting of the Board of Directors and $1,000 per committee meeting attended. In addition, the chair of the Audit Committee receives an Audit Committee annual retainer of $8,000 and the chair of the Compensation Committee receives a $3,000 Compensation Committee annual retainer. Mr. Burish receives an annual retainer of $35,000 as compensation for his services as Chair of the Board of Directors. The total fee compensation earned by the four non- employee directors combined in Fiscal 2018 was $218,020. When traveling from out-of-town, the members of the Board of Directors are also eligible for reimbursement for their travel expenses incurred in connection with attendance at Board meetings and Board Committee meetings. Directors who are also employees do not receive any compensation for their participation in Board or Board Committee meetings.

Pursuant to the 2008 Sonic Foundry Non-Employee Amended Directors Stock Option Plan (the “Directors Plan”) we grant to each non-employee director who is reelected or who continues as a member of the Board of Directors at each annual stockholders meeting a stock option to purchase 2,000 shares of Common Stock. Further, the chair of our Audit Committee receives an additional stock option grant to purchase 500 shares of Common Stock per year pursuant to Sonic’s Non-Employee Amended Directors Stock Option Plan.

The exercise price of each stock option granted was equal to the market price of Common Stock on the date the stock option was granted. Stock options issued under the Directors Plan vest fully on the first anniversary of the date of grant and expire after ten years from date of grant. An aggregate of 150,000 shares are reserved for issuance under the Directors Plan.

If any change is made in the stock subject to the Directors Plan, or subject to any option granted thereunder, the Directors Plan and options outstanding thereunder will be appropriately adjusted as to the type(s), number of securities and price per share of stock subject to such outstanding options.


13

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


The options and warrants set forth above have an exercise price equal to the fair market value of the underlying common stock on the date of grant. The term of all such options is ten years.

The following table summarizes cash and equity compensation provided our non-employee directors during the fiscal year ended September 30, 2018.









Name
(a)
 





Fees Earned Or Paid In Cash
($)(1)
(b)
 






Stock Awards
($)(2)
(c)
 






Option Awards
($)(3)
(d)
 




Non-Equity Incentive
Plan Compen-sation
($)
(e)
 
Change in Pension
Value and
Non-qualified Deferred Compen-
sation
Earnings
($)
(f)
 






All Other Compensation
($)
(g)
 







Total
($)
(h)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark D. Burish
 
67,000
 
-
 
1,360
 
-
 
-
 
-
 
68,360
Frederick H. Kopko
 
30,000
 
-
 
1,360
 
-
 
-
 
-
 
31,360
Nelson A. Murphy
 
48,595
 
-
 
1,700
 
-
 
-
 
-
 
50,295
David F. Slayton
 
38,425
 
-
 
1,360
 
-
 
-
 
-
 
39,785
Brian T. Wiegand
 
34,000
 
-
 
1,360
 
-
 
-
 
-
 
35,360

(1)
The amount reported in column (b) is the total of retainer fees and meeting attendance fees paid in cash.
(2)
The amount reported in column (c) is the total of retainer fees and meeting attendance fees awarded in common stock.
(3)
The amount reported in column (d) is the aggregate grant date fair value of options granted during the fiscal year ended September 30, 2018 in accordance with FASB ASC Topic 718. Each director received an option award of 2,000 shares on May 17, 2018 at an exercise price of $2.24 with a grant date fair value of $1,360. In addition, Mr. Murphy received a grant of 500 shares on May 17, 2018 at an exercise price of $2.24 with a grant date fair value of $340 in connection with his position as chair of the Audit Committee.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table shows information known to us about the beneficial ownership of our Common Stock as of January 28, 2019, by each stockholder known by us to own beneficially more than 5% of our Common Stock or our 9% Cumulative Voting Convertible Preferred Stock, Series A ("Series A Preferred Stock"), each of our executive officers named in the Summary Compensation Table (“Named Executive Officers”), each of our directors, and all of our directors and executive officers as a group. Unless otherwise noted, the mailing address for these stockholders is 222 West Washington Avenue, Madison, Wisconsin 53703.

Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to shares. Shares of common stock issuable upon the exercise of stock options or warrants exercisable within 60 days after February 28, 2019, which we refer to as Presently Exercisable Options or Presently Exercisable Stock Warrants, are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person. Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. The inclusion of any shares in this table does not constitute an admission of beneficial ownership for the person named below.


14

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


COMMON STOCK
Name of Beneficial Owner(1)
 
Number of Shares of Class
Beneficially Owned
 

Percent
of Class(2)
Mark D. Burish(3)
33 East Main St.
Madison, WI 53703
 
2,130,255
 
32.6%
Andrew D. Burish(4)
8020 Excelsior Drive
Madison, WI, 53717
 
1,056,944
 
17.6
Wealth Trust Axiom LLC (5)
4 Radnor Corp Center, suite 520
Radnor PA 19087
 
352,435
 
6.7
Gary R. Weis(6)
 
304,440
 
5.6
Kenneth A. Minor(7)
 
161,834
 
3.0
Robert M. Lipps(7)
 
120,430
 
2.2
Micheal Norregaard (8)
 
20,416
 
*
Frederick H. Kopko, Jr.(9)
29 South LaSalle Street
Chicago, IL 60603
 
57,282
 
1.1
Brian T. Wiegand (10)
1600 Aspen Commons
Middleton, WI 53562
 
35,135
 
*
Nelson A. Murphy(11)
2300 W. Innes St.
Salisbury, NC 28144
 
2,000
 
*
David F. Slayton(12)
701 Washington Ave N., Suite 400
Minneapolis, MN 55401
 
12,599
 
*
All current Executive Officers and Directors as a Group (9 persons)(13)
 
2,844,391
 
40.5%

*    less than 1%
(1)
Sonic believes that the persons named in the table above, based upon information furnished by such persons, except as set forth in note (5) where such information is based on a Schedule 13G, have, except as set forth in note (5), sole voting and dispositive power with respect to the number of shares indicated as beneficially owned by them.
(2)
Applicable percentages are based on 5,270,425 shares outstanding, adjusted as required by rules promulgated by the Securities and Exchange Commission.
(3)
Includes 764,060 shares subject to presently Exercisable Warrants, 16,000 shares subject to Presently Exercisable Options and the issuance of up to an aggregate of 482,475 shares of common stock upon the conversion 2,040.87 shares of Series A Preferred Stock.
(4)
Includes 271,455 shares subject to Presently Exercisable Common Stock Warrants. Information is based on information provided to the Company on January 22, 2019.
(5)
Information is based on Schedule 13G filed on January 7, 2019 by Albert C. Matt, President of Wealth Trust Axiom LLC. Based on such information, Wealth Trust Axiom LLC has sole dispositive power but not sole voting power with respect to such shares.
(6)
Includes 208,554 shares subject to Presently Exercisable Options.
(7)
Includes 118,355 shares subject to Presently Exercisable Options.
(8)
Includes 15,416 shares subject to Presently Exercisable Options.
(9)
Includes 18,000 shares subject to Presently Exercisable Options.
(10)
Includes 12,000 shares subject to Presently Exercisable Options.
(11)
Includes 2,000 shares subject to Presently Exercisable Options.
(12)
Includes 2.000 shares subject to Presently Exercisable Options.
(13)
Includes an aggregate of 510,680 Presently Exercisable Options and 482,475 shares subject to conversion of Series A Preferred Stock.



15

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


SERIES A PREFERRED STOCK
Name of Beneficial Owner
 
Number of Shares of Class
Beneficially Owned
 

Percent
of Class
 
 
 
 
 
Mark D. Burish
33 East Main St.
Madison, WI 53703
 
2,040.87
 
100.0%
Andrew D. Burish
8020 Excelsior Drive
Madison, WI, 53717
 
—
 
—
Wealth Trust Axiom LLC
4 Radnor Corp Center, suite 520
Radnor PA 19087
 
—
 
—
Gary R. Weis
 
—
 
—
Kenneth A. Minor
 
—
 
—
Robert M. Lipps
 
—
 
—
Michael Norregaard
 
—
 
—
Frederick H. Kopko, Jr.
29 South LaSalle Street
Chicago, IL 60603
 
—
 
—
Brian T. Wiegand
1600 Aspen Commons
Middleton, WI 53562
 
—
 
—
Nelson A. Murphy
2300 W. Innes St.
Salisbury, NC 28144
 
—
 
—
David F. Slayton
701 Washington Ave N., Suite 400
Minneapolis, MN 55401
 
—
 
—
All current Executive Officers and Directors as a Group (9 persons)
 
2,040.87
 
100.0%


As of March 21, 2019, there were 2,040.87 shares of 9% Cumulative Voting Convertible Preferred Stock, Series A (“Series A Preferred Stock”) issued and outstanding, which has a liquidation amount of $1,000.00 per share and votes together with the Company’s common stock at a rate of 236 votes per share.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Frederick H. Kopko, Jr., a director and stockholder of Sonic Foundry, is a partner in McBreen & Kopko. Pursuant to the 2008 Non-Employee Directors Plan, Mr. Kopko was granted options to purchase 18,000 shares of Common Stock at exercise prices ranging from $2.24 to $14.83. During fiscal 2018, we paid the Chicago law firm of McBreen & Kopko certain compensation for legal services rendered subject to standard billing rates.

Director Independence

Although the Company's stock is no longer listed on the NASDAQ Stock Market ("NASDAQ"), the Company intends to comply with most of the listing requirements for such market. NASDAQ requires that a majority of the members of our Board be independent, as defined under NASDAQ’s rules. The NASDAQ rules have both objective tests and a subjective test for determining who is an “independent director.”  The objective tests state, for example, that a director is not considered independent if he or she is an

16

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018


employee of the Company or has engaged in various types of business dealings with the Company. The subjective test states that an independent director must be a person who lacks a relationship that in the opinion of the Board would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has made a subjective determination as to each independent director that no relationship exists that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviews information provided by the directors in an annual questionnaire with regard to each director’s business and personal activities as they relate to the Company. Based on this review and consistent with NASDAQ’s independence criteria, the Board has affirmatively determined that Mark D. Burish, Nelson A. Murphy, David F. Slayton and Brian T. Wiegand are independent.

Related Person Transaction

The Board has adopted a Related Person Transaction Policy (the “Policy”), which is a written policy governing the review and approval or ratification of Related Person Transactions, as defined in SEC rules.

Under the Policy, each of our directors and executive officers must notify the Chairman of the Audit Committee in writing of any new potential Related Person Transaction involving such person or an immediate family member. The Audit Committee will review the relevant facts and circumstances and will approve or ratify the transaction only if it determines that the transaction is not inconsistent with, the best interests of the Company. The Related Party Transaction must then be approved by the independent directors. In determining whether to approve or ratify a Related Person Transaction, the Audit Committee and the independent directors may consider, among other things, the benefits to the Company; the impact on the director’s independence (if the Related Person is a director or an immediate family member); the availability of other sources for comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit services performed by BT for Fiscal 2018 and 2017 consisted of the examination of our financial statements, review of fiscal quarter results, and services related to filings with the Securities and Exchange Commission (SEC). We also retained BT to perform certain audit related services associated with the audit of our benefit plan. All fees paid to BT were reviewed, considered for independence and upon determination that such payments were compatible with maintaining such auditors’ independence, approved by Sonic’s audit committee prior to performance.

Fiscal Years 2018 and 2017 Audit Firm Fee Summary

During fiscal years 2018 and 2017, we retained our principal accountant, Baker Tilly Virchow Krause LLP to provide services in the following categories and amounts:

 
Years Ended September 30,
 
2018
 
2017
Audit Fees
Audit Related
$382,913
18,200
 
$299,510
13,222
Tax Fees
0
 
0

All of the services described above were approved by Sonic’s audit committee prior to performance. The Audit Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent auditors, provided that any such approvals are presented to the Audit Committee at its next scheduled meeting. The audit committee has determined that the payments made to its independent accountants for these services are compatible with maintaining such auditors’ independence.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

17

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018



(b) The following exhibits are filed as part of this report:

NUMBER    DESCRIPTION
31.1        Section 302 Certification of Chief Executive Officer
31.2        Section 302 Certification of Chief Financial Officer and Secretary
32        Section 906 Certification of Chief Executive Officer and Chief Financial Officer and Secretary


18

Sonic Foundry, Inc.
Annual Report on Form 10-K/A
For the Year Ended September 30, 2018



SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) 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)
By:
 
/s/ Gary R. Weis
 
 
Gary R. Weis
Chairman and Chief Executive Officer
 
 
 
Date:
 
March 21, 2019


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.
Signature
 
Title
 
Date
 
 
 
 
 
/s/ Gary R. Weis
 
Chief Executive Officer and Director
 
March 21, 2019
 
 
 
 
 
/s/ Kenneth A. Minor
 
Chief Financial Officer and Secretary
 
March 21, 2019
 
 
 
 
 
/s/ Mark D. Burish
 
Chair and Director
 
March 21, 2019
 
 
 
 
 
/s/ Frederick H. Kopko, Jr.
 
Director
 
March 21, 2019
 
 
 
 
 
/s/ Brian T. Wiegand
 
Director
 
March 21, 2019
 
 
 
 
 
  /s/ Nelson A. Murphy
 
Director
 
March 21, 2019
 
 
 
 
 
  /s/ David F. Slayton
 
Director
 
March 21, 2019



19