Edgar Filing: SONIC FOUNDRY INC

As filed with the Securities and Exchange Commission on December 21, 2001

Registration No. _______________

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

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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

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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 3,574,601 $2.69 $ 9,615,677 $2,298
value
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Common Stock $.01 par
value, underlying 370,000 $2.69 $ 995,300 $238
Warrants (2)
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Total 3,944,601 $2.69 $10,610,977 $2,536
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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 December 19, 2001.

(2) 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.
3,944,601 Shares of Common Stock, Par Value $.01 per Share

This prospectus is part of a registration statement that covers 3,944,601 shares
of our Common Stock (the "Shares"), consisting of (i) 3,574,601 Shares currently
outstanding and (ii) 370,000 Shares issuable upon exercise of certain warrants.
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.

Each of the Selling Stockholders may be deemed to be an "Underwriter", as
such term is defined in the Securities Act of 1933, as amended (the "Securities
Act").

Our Common Stock is quoted on the Nasdaq National Market under the symbol
"SOFO". On December 19, 2001, the average of the high and low price for the
Common Stock was $2.69 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 December 21, 2001

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

- Our Current Report on Form 8-K filed on October 30, 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
Corporation, Inc. d/b/a Sonic Foundry Media Services and Sonic Foundry Systems
Group, Inc. d/b/a Sonic Foundry Media Systems, 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.

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 Systems Group, 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 September 30, 2001, we had an accumulated
deficit of $148 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 and services 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 and services 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.

MediaSite's 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. We are currently in the process of
re-negotiating the License Agreement for an exclusive license in a defined field
of use. This business is dependent on the continuation of the License Agreement
and the availability to us of the technology licensed thereunder. If we are
unsuccessful in obtaining an exclusive license, there is a risk that Carnegie
Mellon could license the technology to another party, including a competitor.
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, 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 R. 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 MediaSite transaction, we currently have no
commitments or agreements with respect to any business acquisitions or
investments.

Our acquisition of the assets of MediaSite, Inc. involves risks.

On October 15, 2001, the Company completed the acquisition of certain
assets, and the assumption of certain liabilities, of MediaSite, Inc. Although
the Company purchased the assets of MediaSite 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 MediaSite.

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

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

In the first quarter of 2002, the Company plans to adopt new accounting
rules regarding business combinations and the amortization of intangible assets.
Under the new rules, the Company would cease the amortization of goodwill and
would annually assess its carrying value. See footnote 1, 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 nearly 40% 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 November 30,
2001, the closing price of our common stock ranged from $1.01 to $5.688 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 September 30, 2001, we had outstanding options and warrants to
acquire 4,019,540 shares of common stock, 1,952,529 of which are subject to
future vesting. Included in the foregoing are 2,974,314 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, 1,021,785 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 (through December19 2001) ...................... 4.44 1.00

The last traded price on December 19, 2001 for our common stock was $2.66.
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 December 19, 2001 there were 371 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

On October 15, 2001, we purchased substantially all the assets of
MediaSite, Inc., now known as mtmsi, Inc. We issued 3,780,000 shares of our
common stock to mtmsi, or its stockholders, security holders, or former
employees in connection with the transaction, of which 3,452,801 are covered by
this registration statement. We also issued 100,000 shares to Covington
Associates, 1,800 shares to R.J. Holmberg, and 20,000 shares to the Branding
Group, LLC, which were not related to the MediaSite transaction. As part of the
transaction with mtmsi, Inc., we agreed to file a registration statement
covering the sale of our shares by the shareholders of mtmsi, Inc., its security
holders and former employees.

This Prospectus covers the 3,574,601 Shares presently issued, of which
3,452,601 were issued to mtmsi, Inc., its stockholders or security holders or
former employees. This Prospectus also covers 370,000 shares to become issuable
upon exercise of certain warrants, of which 300,000 Shares were issued in
connection with the MediaSite transaction.

The following table sets forth certain information as of December 20, 2001
with respect to the Selling Stockholders.

Pursuant to certain agreements we have with mtmsi and certain key
stockholders, we agreed to file a registration statement covering the Shares
issued to mtmsi or its stockholders or security holders.

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 OUTSTANDING
------------------------------------- -------------------- -------------------- -----------------------

COMMON STOCKHOLDERS

Abramson, Marc S. 557 557
Bardeen, Maxwell D. 2,241 2,241
Becker, David J. 440 440
Benzing, E. Peter and Lizzi TEN COM 668 668
Berger, Michael 668 668
Birchmere Investments, L.P. 16,199 16,199
Brodbeck, Charles R. 66,322 66,322
Brodbeck, Dr. Joseph M. II 5,951 5,951

Brodbeck, Jill M. 528 528
Brodbeck, Linda L. 5,951 5,951
Bromberg, Howard J. 1,143 1,143
Carleton, James Terence 7,907 7,907
Carlson, Richard C. 557 557
Carnegie Mellon University (2) 6,564 6,564
Catz, Alvin J. 4,939 4,939
Centrella, Michael S. 696 696
Cohen and Grigsby, PC 111 111
Collins, John T. 39,971 39,971
Combs, Sarah 334 334
Cooper, Marc E. 11,901 11,901
Corporate Benefit Systems, Inc. Profit
Sharing Plan 9,643 9,643
Critical Path, Inc. 4,455 4,455
Cross Highway Holdings LLC 1,114 1,114
CSM Partners 258,499 258,499
Dimitry, Theodore G. 19,242 19,242
Downey, Walter L. 3,435 3,435
Edwards, James M. 8,962 8,962
Farkas, Farial and Barry 6,735 6,735
Fayerweather D.P.L.P. 1,114 1,114
Fischer, Chester G. 1,099 1,099
Friedman, Dennis J. 557 557
Glinka, Charlotte E. 2,241 2,241
Harbhajan S. Paul and Gail Sekas Paul 651 651
Hastings, Thomas J. 6,735 6,735
Hedrick, Thomas F. 3,367 3,367
Hillcrest Family Partnership LP 1,336 1,336
Imbriglia, Joseph E. Irrevocable Trust,
Joseph E. Imbriglia, Trustee 557 557
Isherwood, John S. 115 115
Johnson, Eleanor W. 211 211
Kahan, James S. 223 223
Kim Enterprises, L.P. 557 557
Lacoff, Don 223 223
Lange, Rita Perlow 5,568 5,568
Lardis, Dirk B. and Mary L. JT TEN 334 334
Lederman, Sanford M. MD 223 223
Lee John N. Trust U/A Dated 10/05/92 579 579
Lionel Trust 2,227 2,227
Loucas, Ronald 1,114 1,114
McCartney, James W. 7,376 7,376
McDonel, Mark E. 1,670 1,670
McKelvey, Andrew J. 22,273 22,273
mtmsi, Inc. 149,848 149,848
Michaels, J. Patrick Jr. 557 557

MK Investors 99-1, LP 4,900 4,900
Myslinski, Mark D. 572 572
Najjar Family Limited Partnership 2,227 2,227
Najjar, Edward G. 1,448 1,448
Najjar, Elizabeth A. Trust U/A Dated
08/10/93 780 780
Najjar, Michael E. Trust U/A Dated
08/10/93 780 780
Najjar, Susan M. Trust U/A
Dated 08/10/93 780 780
Nelson, David and Keith, Katherine L. 891 891
New Media Holdings Ltd. 362,676 362,676
Nimick, Jr., Thomas H. Revocable Trust
U/A/D July 15, 1970, as amended 14,337 14,337
Nimick, Jr. Thomas H. Revocable Trust 633 633
Oswald, John P. 3,970 3,970
Paine Webber, Custodian f/b/o Donald V.
Little IRA 1,448 1,448
Paine Webber, Custodian f/b/o Stuart
McLeod IRA 445 445
Parker/Hunter, Inc. Custodian f/b/o Henry
McIngram IRA 557 557
Patton, Richard G. 7,398 7,398
Pernix Equity Investments, Inc. 28,937 28,937
Price, Michael J. 2,227 2,227
Reynolds, Thomas H. 1,114 1,114
Robinson, Stephen G. 11,611 11,611
Roemer Family, LP 1,085 1,085
RRZ Private Equity Fund LP 22,273 22,273
Salend, Howard J. 1,114 1,114
Santomero, Camillo and Denise C.R. 1,497 1,497
Saturn Partners Limited Partnership 483,119 483,119
Scaife, David 1,114 1,114
Scarlata, Antonia L. 1,114 1,114
Schmid, Walter and Leslie 668 668
Schofield, Douglas F. 6,943 6,943
Schwartzbaum, David M. 3,635 3,635
Sebastian, Sean D.S. 334 334
Sullivan, Barry R. 557 557
Sullivan, Timothy P. 334 334
Sunstein, Leon C. Jr. 19,225 19,225
Tanger, Alexander M. 557 557
Thorne, John R. 445 445
Three G Company 1,670 1,670
Three Rivers Urology Pension & Profit
Sharing Plan 1,114 1,114

Unkovic, John 557 557
Vahabzadeh, Alex 13,298 13,298
Walton, Joseph C. and Molly E. as tenants
by the entireties 557 557
Wasserman, Harvey 1,143 1,143
Wekstein, Walter D. 223 223
West Penn ENT Association 1,114 1,114
Western Pennsylvania Adventure Capital
Fund 19,350 19,350
Windsong Partners, LP 2,227 2,227
Wolf, John M. Jr. 11,892 11,892
Zero Stage Capital Associates VI Limited
Partnership 1,470,508 1,470,508
Zoe Capital LLC 1,114 1,114
Covington Associates (1) 100,000 100,000
R.J. Holmberg (1) 1,800 1,800
The Branding Group, LLC (1) 20,000 20,000
Bua, Gina 7,140 7,140
DeRiso, Michael 30,000 30,000
Goudey, Richard 6,910 6,910
Hurst II, Irwin 6,830 6,830
Macintyre, Thomas 7,130 7,130
Mehra, Vinay 75,400 75,400
Olson, Steven 30,000 30,000
Spray, Kathleen 7,115 7,115
Wactlar, Howard 69,276 69,276
Total 3,574,601 3,574,601

WARRANT HOLDERS

Carnegie Mellon University (3) 100,000 100,000
Gould, Lawrence (1) 25,000 25,000
Pendyala, Krishna (4) 100,000 100,000
Rose, Stuart (1) 25,000 25,000
Wactlar, Howard (5) 100,000 100,000
Enzer, David (1) 20,000 20,000
Total 370,000 370,000

(1) Except for Covington Associates, R.J. Holmberg, Stuart Rose, Lawrence
Gould, David Enzer and the Branding Group, LLC, the stockholders or
warrant holders set forth above were all former stockholders, security
holders or former employees of MediaSite.
(2) Does not include 100,000 shares that may be acquired upon exercise of
a warrant. See note (3).
(3) Does not include 6,564 shares registered herein. See note (2) above.
(4) Co-founder of MediaSite.
(5) Co-Founder of MediaSite.

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.

In addition, pursuant to a certain Stock Restriction and Registration
Agreement, each of Zero Stage Capital VI Limited Partnership, Saturn Capital,
Inc., and Saturn Partners Limited Partnership (the "Restricted Holders") agreed
that the Shares acquired by them pursuant to the transaction (the "Acquired
Shares") shall not be transferred or disposed of by the Restricted Holders until
3 months following the Closing (which occurred on October 15, 2001). Thereafter
in each succeeding 3 month period, each Restricted Holder may transfer or
dispose of up to 33 1/3% of the Acquired Shares so that the restriction on the
transfer or disposal of the Acquired Shares, only to 66 2/3% of the Acquired
Shares after 3 months from the Closing, only to 33 1/3% of the Acquired Shares
after 6 months from Closing, and to none of the Acquired Shares after 9 months
from Closing.

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
180,000 shares of our Common Stock.

EXPERTS

The financial statements of Sonic Foundry, Inc. at September 30, 2001 and
for the fiscal year then ended, incorporated by reference in this Prospectus
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report incorporated by reference herein,

and are included 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 ...................................................... 19
Legal Matters ............................................................. 19
Experts .................................................................. 19
Information Contained Only in Prospectus ..................................II-1

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 .............................. $ 2,536

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

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

Total .............................................$ 27,536
=========

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

II-1

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 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) Asset Purchase Agreement and Plan of Asset Transfer, dated
September 6, 2001, by and among the Company, Sonic Foundry
Systems Group, Inc. (formerly known as MediaSite
Acquisition, Inc.), and MediaSite, Inc.

3.1(2) Amended and Restated Articles of Incorporation (2).

3.1(2) Amended and Restated By-Laws (2).

4.1(2) Specimen Common Stock Certificate.

4.2 Stock Restriction and Registration Agreement, dated as of
September 6, 2001, by and among the Company, Zero Stage
Capital VI Limited Partnership, Saturn Capital, Inc., and
Saturn Partners Limited Partnership.

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 October 30, 2001.

(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.

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

II-3

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 December 21, 2001.

SONIC FOUNDRY, INC.

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

II-4

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 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
December 21, 2001

/s/ Monty R. Schmidt President and Director
------------------------------------
Monty R. Schmidt
December 21, 2001

/s/ Curtis J. Palmer Chief Technology Officer and Director
---------------------------
Curtis J. Palmer
December 21, 2001

/s/ Kenneth A. Minor Chief Financial Officer and
------------------------------------ Secretary
Kenneth A. Minor
December 21, 2001

/s/ Frederick H. Kopko, Jr. Director
------------------------------------
Frederick H. Kopko, Jr.
December 21, 2001

/s/ Rimas P. Buinevicius* Director
---------------------------
Arnold B. Pollard

II-5

December 21, 2001

/s/ Rimas P. Buinevicius* Director
---------------------------
David C. Kleinman
December 21, 2001

*Pursuant to Power of Attorney

II-6

Exhibit Index

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

2.1(1) Asset Purchase Agreement and Plan of Asset Transfer,
dated September 6, 2001, by and among the Company,
Sonic Foundry Systems Group, Inc. (formerly known as
MediaSite Acquisition, Inc.), and MediaSite, Inc.

3.1(2) Amended and Restated Articles of Incorporation (2).

3.1(2) Amended and Restated By-Laws (2).

4.1(2) Specimen Common Stock Certificate.

4.2 Stock Restriction and Registration Agreement, dated as
of September 6, 2001, by and among the Company, Zero
Stage Capital VI Limited Partnership, Saturn Capital,
Inc., and Saturn Partners Limited Partnership.

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 October 30, 2001.
(2) Incorporated by reference from Registration Statement No. 333-46005 on Form
SB-2 filed on February 10, 1998.

-------------------