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SLS Audio President John Gott holds the newly developed and patented square T-Link amplifier-system monitoring product and the D-Fend speaker power intake blocker. The company has put a focus on component development since SLS International went bankrupt in 2009.
SLS Audio President John Gott holds the newly developed and patented square T-Link amplifier-system monitoring product and the D-Fend speaker power intake blocker. The company has put a focus on component development since SLS International went bankrupt in 2009.

SLS taps theaters, churches for revival

Posted online
Last edited 8:49 a.m., Nov. 18, 2011

“Don’t call it a comeback!” shouted rap and pop artist LL Cool J in his 1992 hit single, “Momma’s Gonna Knock You Out.” The phrase is applicable to Ozark-based SLS Audio and President John Gott, who is marshalling the audio speaker manufacturer into a new era.

Gott has been the business’ leader through thick and thin even as the formerly publicly traded SLS International Inc. declared bankruptcy in 2009.

Gott said after SLS International tried to break into the retail market with speakers on the shelves of big-box retailers Wal-Mart and Best Buy in 2005 and 2006, funding fell short from its hedge-fund investors, and the company’s stock plummeted. Ultimately, SLS declared Chapter 11 bankruptcy and sold its assets to its parent company, Intrinsic Audio Solutions Inc., established in April 2009 by Gott and two unnamed partners, according to Missouri secretary of state records. Intrinsic then formed SLS Audio as the Chapter 11 was converted to a Chapter 7 filing, and in June 2009, Gott was named the company’s sole board member.

In the two years operating as SLS Audio – in its original Ozark manufacturing facility at 1650 W. Jackson St. – the company has worked to reclaim some of its former hype, though Gott said its energy is now invested in the development of new technologies. Working with 20 employees, one fewer than when SLS International filed for bankruptcy, Gott said SLS has obtained five patents, and three patents are pending on technologies SLS is developing to be sold to industry brands such as JBL, Klipsch and QSC Audio.

“We focused a lot of our time and energy during the kind of quiet period, during the transition on … the new ideas and new technologies that we have,” Gott said.

The company also has a licensing agreement with Kentucky-based distributor Eminence Speaker LLC on its patented D-Fend product, which limits the amount of power sent to a speaker in order to prevent blown speakers, Gott said.

The technology development work, plus its focus on what Gott called its traditional customer base – churches, cinemas, arenas and theaters – has helped the company grow its revenues by 15 percent in 2011 compared to 2010. With big installation projects planned for a cinema complex in Houston, Texas, and a theater chain in Canada in 2012, Gott expects sales to double next year, though he declined to provide revenue figures.

He said the company currently has a dozen sizable cinema customers in North America and South America, boosted by the conversion of many cinemas to full-digital projection systems.

Amp’d up
Newly developed digital amplifier technology, created by SLS Audio’s wholly owned subsidiary Evenstar, has lead to the production of more efficient amplifiers, Gott said.

“Our amplifiers are 90-plus percent efficient and most amplifiers are between 50 percent and 65 percent efficient – meaning if you put 1,000 watts in, with most amplifiers, you get 500 to 650 watts out. The rest of it goes out as heat. With our amplifiers, when you get 1,000 watts from the wall, you get 900-plus watts out,” he said, adding that the amplifier, which has multiple patents, is easier to produce and lightweight at 12 pounds.

In 2012, a 22-screen theater and restaurant complex in Houston, Texas, will feature sound with the help of SLS amplifiers. The amps with the newly developed T-Link technology will be installed at the Houston Palladium complex. The technology allows data to flow from speakers to amplifiers to a computer system that can monitor performance.

“For instance, in this big movie theater where there will be 500-plus speakers, you can go to your computer in the morning and hit one button and get an analysis of every speaker and every amplifier and every component in the system instantly,” Gott said.

Closer to home, the recently opened B&B Theatres has been equipped with all new SLS speakers. JQH Arena, Gillioz Theatre and several area churches including Wesley United Methodist are outfitted with the SLS brand, Gott said.

Distortion
While the company is angling for a turnaround, Gott admits that times have been tough the last few years, and SLS has a lot of ground to make up.

The company went public in 2001, and began to try to break into the retail market in 2005, Gott said.

SLS unveiled a $1.5 million ad campaign that year featuring Grammy Award-winning producer Quincy Jones and had test runs with Wal-Mart and Best Buy. But neither deal panned out in the long run despite SLS being a featured product on “The Apprentice” in prime time television. In August 2006, the company reported more than $600,000 in revenues for the month while it was in more than 600 Best Buy stores. Later that year, the stock bottomed out at 14 cents per share and fell out of compliance with the American Stock Exchange’s listing standards.

“We got into a situation with a large group of hedge-fund investors that wanted to support us to take our technology into the consumer market space through Best Buy. And we did a test with Wal-Mart, but we got out of there pretty quick,” Gott said. “We did have a lot of momentum going, but then the rest of the funding necessary to continue on and capitalize in that market didn’t come to fruition.”

When the company filed for bankruptcy, it had between 100 and 199 creditors, and reported $5.7 million in estimated debts with $2.7 million in assets, according to court records.

Among its challenges, the company faced a 2006 lawsuit brought on by rapper Dr. Dre and Interscope Geffen A&M Records Chairman Jimmy Iovine that alleged an oral contract to produce Beats headphones for the pair’s company was breached when SLS attempted to partner with Jibe Audio to distribute the products. SLS was dismissed from the case, but the chance at collaboration was gone.

Looking forward
SLS licensee Eminence Speaker has been manufacturing loudspeakers since 1966. The company produces a house brand and components for a wide range of sound companies, according to Josh Martin, technology sales manager. He said the SLS deal is the company’s first agreement to license a product for another business.  

The product is in the late stages of development with release targeted for mid-January, Martin said.

“We are aware of a lot of the problems that most of our customers have with people blowing up loudspeakers or burning them down with too much power. This technology basically makes the speaker bulletproof, so we see a huge potential for this,” Martin said. “We almost view this as the air bag for the audio industry.”

As a licenser of D-Fend, Eminence has the capability to sub-license the technology to another manufacturer for a royalty fee. Whether it’s a direct sale or a sub-licensing arrangement, SLS would receive an undisclosed percentage of the money earned on each unit produced, he said.

Gott said with the economy taking a turn for the worse, SLS’ failure in the consumer market might have been a good thing, because it forced the company to focus on its original customer base and the development of new technologies.[[In-content Ad]]

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