Sonic Foundry explores capital options

Madison, Wis. - Rich media developer Sonic Foundry, Inc. has exceeded the $75 million market capitalization mark, a milestone that has enabled it to access what CEO Rimas Buinevicius called an “orderly” equity-raising process.

Sonic Foundry has set this process in motion with a registered direct filing with the U.S. Securities and Exchange Commission that seeks to establish a three-year timeframe in which the company will have the option to sell up to 12 million shares of common stock in one or more separate offerings.

Although the company will be under no obligation to sell any shares, it could raise a total $42.6 million with the $3.55 per share value reported at the time of the filing.

“It's a very powerful tool for the company to use for all sorts of situations that may arise,” Buinevicius said. “In essence, it opens up a whole sphere of opportunities for us down the road.”

Off the shelf The $42.6 million estimate is subject to change as the value of the stock fluctuates, however. Under such a "shelf registration," a company may sell securities with the size, price, and terms to be determined at the time of the sale.

Buinevicius said proceeds from a possible sale of stock could be used for any of approximately 50 corporate initiatives, including the expansion and enhancement of its product offerings, which he called a top priority.

“We're talking about building search processing grids and building out our data center capability. This does not come without cost.” Buinevicius said. “So we fully anticipate that there will be some need for expanding some of our capital investments in what we're doing.”

Potential equity could also be used for defense of intellectual property, licensing fees, or merger and acquisition opportunities, Buinevicius added.

The SEC could approve the filing within about seven days or could place it under review in a process that could take up to 90 days. Sonic Foundry has found that about 25 percent of their filings are reviewed.

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