SLS secures multimillion-dollar license agreement

Under the agreement, announced June 29, SLS has granted DGM Audio LLC exclusive worldwide rights to manufacture, market and sell headsets and headphones that use SLS’ patented ribbon-driver technology and other company trademarks.

DGM plans to produce and market the headphones immediately and expects to have them in retail stores by the end of the year, according to an SLS news release.

The agreement stipulates that DGM pay SLS a nonrefundable license fee of $300,000 and minimum annual royalty payments of $300,000 in 2007, $600,000 in 2008, $900,000 in 2009 and $1.2 million each year thereafter. Royalties also could increase; for example, if DGM sells 100,000 headphone products, SLS estimates it would receive royalties of about $1.5 million.

“This license is pivotal in our strategy to bring our technology and products to the consumer marketplace,” SLS Chairman and CEO John Gott said in the release. “Our ability to fund the rollout of the headphones for retail sale has been limited. The license will allow us to focus our efforts on our core business – the professional and commercial marketplace – while still capturing much of the potential for our headphones in the retail market.”

In its refined focus, SLS estimates it will be able to reduce annual consulting and managerial expenses by about $1.2 million.

In connection with the DGM agreement, SLS President Steve Lamar has announced his resignation. Lamar’s “strengths and interests best served the retail side of our business,” Gott said in the release, and he expects Lamar to pursue a role with DGM.

SLS shares (AMEX: SLS) closed at 33 cents on June 29 and, the following day, closed at 67 cents. Shares had settled at 51 cents when the market closed Monday.[[In-content Ad]]