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Sonic Foundry has a market cap of $54.32 million; its shares were traded at around $14.92 with a P/E ratio of 135.64 and P/S ratio of 2.65. Hedge Fund Gurus that owns SOFO: Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Revenue in Q1-2011 increased $1.4 million, or 32% from Q1-2010 revenue of $4.5 million to $5.9 million. Revenue consisted of the following:
G&A expenses decreased $184 thousand or 23% over the prior period from $803 thousand in Q1-2010 to $619 thousand in Q1-2011. Major components of the change included:
Product development expenses increased $123 thousand, or 17% from $711 thousand in Q1-2010 to $834 thousand in Q1-2011 resulting primarily from an increase in costs of $116 thousand as a result of higher stock compensation expense.
Cash provided by operating activities was $497 thousand in Q1-2011 compared to cash used by operating activities in Q1-2010 of $(127) thousand, an improvement of $624 thousand. Cash provided in Q1-2011 increased primarily by a $543 change in net income, from a net loss of $(320) thousand in Q1-2010 to net income of $223 thousand in Q1-2011. Working capital changes included the positive effects of a $651 thousand decrease in accounts receivable, $179 thousand of share based compensation, $159 thousand of depreciation expense and $60 thousand of deferred taxes. These were partially offset by the negative effects of increases in inventory of $353 thousand, a decrease in unearned revenue of $347 thousand and an increase in prepaid expenses and other current assets of $58 thousand. In Q1-2010, working capital changes included the positive effects of reductions in accounts receivable of $225 thousand, reduction in inventory of $133 thousand, reductions in other current assets of $194 thousand, and $133 thousand of depreciation expense. These were mostly offset by the negative effects of a $228 thousand decrease in accounts payable and accrued liabilities and a $231 thousand decrease in unearned revenue.
Cash provided by financing activities was $288 thousand in Q1-2011 compared to use of $85 thousand in Q1-2010. Cash provided in Q1-2011 was due primarily to proceeds from exercise of common stock options and warrants of $372 thousand partially offset by $84 thousand of cash used for payments on notes payable. Cash used in Q1-2010 was primarily due to payments on notes payable.
On March 5, 2010, the Company executed the $1,250,000 Loan and Security Agreement (the “Term Loan”) with Partners for Growth II. L.P. (“PFG”). The Term Loan bears interest at 11.75% per annum with principal due in 36 equal monthly payments of $34,722 beginning April 1, 2011 and continuing through March 1, 2014 unless the combination of the Company’s cash and availability falls below certain levels, at which point the principal will be due in equal payments over the remaining months left in the period ending 36 months from the date of the Term Loan. Coincident with closing of the Term Loan the Company repaid the outstanding balance of its revolving line of credit with Silicon Valley Bank (“SVB”). The Company maintains the revolving line of credit with SVB and has $2.6 million available for borrowing at December 31, 2010.
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