No. 8: AMEX delists SLS stock
By Maria Hoover
Springfield Business Journal Staff
12/25/2006
It’s been a roller-coaster year for Ozark-based SLS International Inc. ¬– and its shareholders. The sound-system-technology manufacturing company posted $10 million in losses in 2005 but came out of the gate with higher revenues and opportunities through product placement for a turnaround.
In the first quarter, SLS (AMEX: SLS) posted a 17.7 percent increase in year-over-year revenue, and a net loss of $3.1 million. Part of the losses were attributed to increased personnel and infrastructure in anticipation of the launch of the company’s Q-Line Gold Home Theater System. Q-Line Gold hit the shelves at Best Buy on May 3.
SLS’ sale of its corporate headquarters in Ozark also was cited by company officials as a factor in the first-quarter loss. The company continues to lease space at the Ozark facility – a move that company officials said was the best use of SLS’ assets.
In June, SLS’ products were seen by an estimated 11.2 million people when they were featured on the season finale of “The Apprentice.”
In August, the company reported a second quarter net loss in operations of $2.2 million – at the same time that it reported a 218 percent increase in quarterly earnings, boosting them to $2.7 million.
The company announced Sept. 1 that it was no longer in compliance with the American Stock Exchange’s listing standards, and faced possible delisting.
Later that month, the company reported record earnings of $935,532 for July and August – and August’s revenues of $615,151 was the highest month in company history except for the months when the Q-Line system was shipped to Best Buy.
On Oct. 4, the company filed a plan with AMEX to regain listing compliance, but on Nov. 7, SLS issued a news release that the plan had been rejected.
In the midst of the ups and downs, the company’s shareholders began to grumble, not only about the plummeting stock price – the stock bottomed out at 14 cents per share in September and hovered near 20 cents in early November – but also about SLS officials’ lack of communication about changes. Among those changes: a pilot program with Wal-Mart that never took off, and the news that Best Buy would stop carrying Q-Line Gold after the initial order sells out.
“… You hope the CEO would step forward and explain,” SLS shareholder Sean Beasley said in November. Beasley, an Oregon electrician, initially bought 4,500 shares for $10,000 and had increased his holdings in SLS to 50,000 shares.
But officials remained fairly tight-lipped about the company’s situation. SLS’ attorney, Jeffrey Mattson of Chicago, said in an Oct. 31 e-mail, “Management is happy for those who made money on SLS stock and feels bad for those who have lost money on SLS stock.” Mattson also noted that Chairman and CEO John Gott, as the company’s single-largest shareholder, faced the same losses as other shareholders.
By Nov. 20, delisting was official, and shares of SLS stock were being traded on the Over-the-Counter Bulletin Board with the new ticker symbol SLSZ.PK.
SLS is hanging tough and revamping its strategies going into 2007. The company has entered into a vendor agreement with The Nationwide Marketing Group, a consumer electronics buying group. The collaboration will put SLS’ consumer products on the shelves of more independent retailers in the United States.
Gott said in a news release this fall that the move to independent retailers is the result of the pilot partnership with Best Buy, through which the company learned that sales are most likely to occur when products are correctly displayed and consumers can test the sound quality.
Both SLS and Nationwide have high hopes for the vendor agreement.
“Our membership loves the product,” Mike Decker, vice president of electronics for North Carolina-based Nationwide, told SBJ in the fall.
Roller-coaster Ride
March 9: SLS ranks No. 5 among Springfield Business Journal’s 2006 Dynamic Dozen, which recognizes the fastest-growing companies in terms of revenues and percentage growth.
May 3: SLS’ Q-Line Gold Home Theater System debuts at Best Buy.
June 5: SLS’ products are featured on the season finale of “The Apprentice.”
Sept. 1: SLS announces that it is no longer in compliance with the American Stock Exchange’s listing standards, making delisting a possibility.
Oct. 4: The company files a plan with AMEX to regain listing compliance.
Nov. 7: SLS announces that AMEX rejected its plan to regain listing
compliance.
Nov. 20: SLS stock is officially delisted and begins trading on the Over-The Counter-Bulletin Board under the ticker symbol SLSZ.PK.
Copyright 2006 SBJ. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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