SLS revenues up 4.2%; CEO eyes profitability

Revenue for the quarter was $1.26 million, compared to $1.21 million in third-quarter 2005. Gross profit was $392,854, an 8.7 percent increase from $361,289 a year ago.

SLS reported a $1.7 million loss from continuing operations, though that’s improved from a $2.95 million loss in the same period last year. The third quarter also brought a net loss, applicable to common shareholders, of $655,015, or 1 cent per share. The loss included $257,964 in noncash charges.

For the nine months ended Sept. 30, SLS revenue totaled $4.95 million, a 71.4 percent increase from $2.89 million last year. Gross profit for period was $1.34 million, up 45.2 percent from 2005.

The year-to-date has resulted in a $7 million loss from operations, compared to an $8.01 million loss in the same period last year. The company’s net loss, applicable to common shareholders, was $7.59 million, or 16 cents.

During the third quarter, SLS entered into a distribution agreement with Nationwide Marketing Group, which is marketing the company’s Q Line Silver System to a larger group of retailers. The agreement, which avoids placing SLS products in “big box” retailers, has reduced the company’s advertising and promotion expenses by $552,000.

“As we have just begun shipping our Q Line products in the end of this quarter to the Nationwide members, the initial response has been very positive,” SLS CEO John Gott said in a news release. “We are expecting these products to gain momentum over the next quarter and in 2007 and build into the primary outlets for our Q Line and other home theater products.”

Also during the third quarter, SLS was notified that it is no longer in compliance with American Stock Exchange listing standards and submitted a compliance plan, which AMEX rejected. AMEX plans to strike SLS common stock, and the company does not intend to appeal that action.

If the delisting goes through, SLS plans to pursue a listing on the Over-the-Counter Bulletin Board.

Company sights are set on profitability, Gott said in the release, and SLS will “continue to manage expenses tightly and focus on driving operating efficiencies and improved results.”

SLS shares (AMEX: SLS) closed Monday at 16 cents and were trading up at 17 cents this morning, after the earnings release. The 52-week range is 14 cents to $1.75.[[In-content Ad]]