Sonomax Signs MOU for University Chair in Auditory Research

Montréal, June 9, 2010 - /CNW Telbec/ Sonomax Technologies Inc. (SHH:TSX Venture) signs a memorandum of understanding with the École de Technologie Supérieure (ETS) of the Université du Quebec to create a five-year renewable $750,000 Industrial Research Chair to conduct unprecedented development of advanced in-ear technologies.

 

“This financial commitment will be leveraged by the government and ETS.  It will give us a long-term cost-effective way to outsource costly and time-consuming labour, and intensive
R & D into the very capable hands of the university and its highly qualified research students
,” said Mr. Laperle, President and CEO, Sonomax Technologies.

 

The Sonomax Industrial Research Chair will be led by former Sonomax Chief Technology Officer and present ETS professor Dr. Jérémie Voix and will include a team of researchers supported by students in electrical and mechanical engineering.

 

The Chair's objectives will be to ensure a long-term strategic investment in the development of Sonomax's acoustical and electro-acoustical technologies, dubbed Sonomax Inside Technology TM and to combine all existing in-ear features (hearing aid, hearing protector, cell phone and music player) into one ‘bionic ear’.

 

This research will give Sonomax a commanding lead allowing the company to mature its products and technology and to overcome some of the barriers in hearing protection and communication earpieces in the consumer, industrial, military and medical markets. 

 

It will also give the company an access to a pool of highly-skilled graduates in this field of study.  

 

ETS will gain a base of intellectual property in the development of emerging technologies that will provide Quebec companies with a high-value technology transfer enhancing and sustaining Quebec’s ability to innovate and compete globally on a level playing field.

 

Sonomax has been collaborating with ETS since 2001 with Dr. Jérémie Voix’s past involvement in the breakthrough development and maturing of SonoPass TM, fielding an attenuation measurement system for hearing protection devices as well as acoustical filtering and the programming of digital signal processing.

 

The award winning research (ETS 2007 Award for Excellence) resulted in the development of an intelligent, instant custom-fit hearing earpiece. Sonomax’s in-ear technology supersedes the capabilities of all existing earpieces and addresses the gamut of problems encountered in the industrial workplace and reduces the risk of noise-induced hearing loss. <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:612.0pt 792.0pt; margin:72.0pt 90.0pt 72.0pt 90.0pt; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} -->

This has fuelled Sonomax’s reputation for innovation in the hearing protection industry.  SonoPass was recently sold to Minnesota-based 3M Innovative Properties Company for $2.5 million (US).

 

“Chairs such as the Sonomax Industrial Research Chair helps attract and retain the best researchers in the country to our university and creates a rewarding academic experience for both industry and educational institutions,” said Dr. Jérémie Voix, Professor, ETS.

 

About École de Technologie Supérieure (ETS)

 

Established in 1974 ETS (École de Technologie Supérieure), part of the Université du Quebec network, educates professional engineers and researchers who are renowned for their practical and innovative approach. In the 35 engineering schools and faculties in Canada, ÉTS ranks among the best, with 40 research chairs, centres and laboratories, to which professors, PDFs and graduate students are associated. This synergy of expertise and experience contributes to scientific progress, higher industrial productivity and quality, as well as the training of a highly qualified workforce.

 

 

 

 

Ready
to
Make
Some
Noise
Ini2a2ng
Coverage
We
believe
Sonomax
has
the
technology
and
rela2onships
to
vastly
broaden
the
customer
base
for
its
proven
products.
And
we
are
excited
about
its
opportuni2es
for
big
wins
in
consumer
electronics.
Sonomax
has
slashed
costs,
abandoned
manufacturing
and
gone
back
to
its
roots
in
research
and
development.
In
the
process,
it
has
reinvented
itself.
The
new
Sonomax
is
not
only
leaner
and
more
fleet-­‐footed,
but
it
is
working
on
some
interes2ng
new
products.
The
core
of
Sonomax
is
its
V4
self-­‐fiJng
earpiece,
which
it
hopes
to
rollout
in
the
industrial
sector
this
year
and
leverage
into
a
breakthrough
product
in
the
consumer
market.
New
products
are
in
development.
The
most
exci2ng
is
“talk
through
the
ear”
technology,
which
could
improve
the
comfort
and
quality
of
Bluetooth
headsets.
Management’s
goal
is
to
sign
new
agreements
with
key
customers.
It
has
recently
signed
its
first
such
agreement.
Once
converted
to
revenue,
investors
will
enjoy
high
margins
and
earnings,
thanks
to
substan2al
cost
cuts.
We
like
Sonomax
and
recommend
it
as
a
buy
for
those
prepared
for
the
uncertain2es
of
unveiling
new
products
and
strategy.
Our
12-­‐month
target
is
$0.10.
Capital
Ideas
-­‐
1
Fabrice
Taylor,
CFA
Jamie
Sellers,
CFA
fabrice@capitalideasresearch.com
May
31,
2010
Target
Price:
$0.10
Stock
Ra4ng:
BUY
TSX-­‐V:
SHH
Sonomax Technologies Inc.
Market
Summary
All
figures
in
millions
unless
per
share
data
Target
Price $0.10
52-­‐week
high/low $0.13/$0.015
Market
Capitaliza2on $19.4
Net
debt $0.5
Shares
outstanding
(mil.) 250.7
Warrants
(mil.) 66.5
Op2ons
(mil.) 20.1
Diluted
Shares
Outstanding
(mil.) 351.7
Management/Directors
Ownership 9.0%
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Sonomax
-­‐
one
year
trading
history
THE
NICHE
Fit
makes
all
in-­‐ear
devices
work
more
effec2vely,
sealing
the
ear
canal
from
unwanted
noise.
Earphones,
Industrial
Hearing
Protec2on
Devices
(HPD),
Hearing
Aids,
and
Military
Products
all
work
beher
when
properly
fit.
However,
tradi2onal
custom
in-­‐ear
pieces
are
2me
consuming
to
fit
and
expensive.
Industrial
workers
rely
on
disposable
foam
ear
plugs
and
re2re
with
hearing
loss.
Kids
are
facing
the
same
risks,
using
basic
earphones
at
full
volume
to
hear
music
over
external
noise.
Many
of
those
with
advanced
hearing
loss
cannot
afford
hearing
aids.
Sonomax
has
set
out
to
make
custom
fit
earpieces
convenient
and
affordable.
Ordinary
people
can
use
a
custom
fit
earpiece
in
new
ways
with
extraordinary
results.
With
a
lower
price,
Sonomax
can
greatly
expand
the
market
for
high
quality
in-­‐ear
devices.
Sonomax’s
greatest
success
has
been
persuading
some
of
the
world’s
leading
mining
companies
to
use
its
custom
fit
Hearing
Protec2on
Devices.
Its
greatest
opportunity
is
on
the
consumer
side,
crea2ng
in-­‐ear
components
for
Apple,
Research
in
Mo2on
and
other
electronics
manufacturers.
In
2009
Sonomax
upgraded
its
technology.
Sonomax’s
exis2ng
V3
depended
on
trained
technicians
to
fit
the
earpiece.
Now
customers
can
fit
the
new
V4
earpiece
themselves,
in
minutes.
We
believe
the
V4
earpiece,
could
represent
the
plajorm
for
a
number
of
innova2ve,
in-­‐ear
devices
across
the
company’s
key
markets:
Industrial,
Consumer,
Military
and
Medical.
The
inside
of
an
ear
is
more
dis.nct
than
a
fingerprint.
Sonomax
has
created
a
way
to
easily
translate
each
person’s
unique
ear
signature
into
perfectly
customized
earpiece.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
2
THE
TECHNOLOGY
Sonomax
divides
its
technology
into
two
main
areas:
the
custom-­‐fihed
earplugs,
“the
outside,”
and
the
components
that
make
the
earpiece
work,
“the
inside.”
V4
will
be
the
earpiece
that
will
fulfill
mul2ple
purposes.
Sonomax
Outside
Disposable
foam
earplugs
are
the
most
popular
way
of
protec2ng
workers’
hearing.
However,
the
U.S.
government’s
Occupa2onal
Safety
and
Health
Administra2on
has
ordered
employers
to
do
beher.
Earphones,
earbuds
and
Bluetooth
earpieces
suffer
from
similar
problems:
they
are
uncomfortable,
they
fall
out
and
they
leak
sound,
causing
users
to
turn
up
the
volume
and
endanger
their
hearing.
A
custom
earplug
that
fills
the
ear,
provides
an
acous2c
seal
keeps
the
earpiece
in
and,
unwanted
sound
out.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
3
Hearing
loss
is
the
number
one
occupa.onal
risk
for
industrial
workers.
278
million
people
worldwide
need
hearing
aids
according
to
the
WHO.
The
Sonomax
components
for
a
sound
isola.ng,
custom
expansion
earpiece.
The
building
blocks
for
high
quality
in-­‐ear
technology.
Sonomax Inside™
Technology
Drivers / Filters / DSP
Modules
Sonomax
Inside™
Technology
Sonomax
Outside™
Technology
Consumer:
Earphones
&
Bluetooth
Military:
Communica.on
Industrial:
Hearing
Protec.on
Medical:
Hearing
Aids
and
Assis.ve
Hearing
Sonomax
earpieces
deliver
a
beher
fit
with
a
shorter
delivery
2me
and
lower
cost.
The
tradi2onal
moulding
process
involves
injec2ng
silicone
into
the
ear,
removing
the
silicone,
crea2ng
a
plaster
mould
and,
cas2ng
the
earpiece.
The
Sonomax
solu2on
involves
placing
a
core
surrounded
by
a
thin
bladder
into
the
ear
and
injec2ng
silicon
to
fill
the
bladder
and
fit
the
inside
of
the
ear.
These
earplugs
can
then
be
fihed
with
filters
to
muffle
noise,
amplifiers
for
use
in
hearing
aids,
or
speakers
for
headphones.
V4
V4
can
be
fit
by
the
user
in
four
minutes.
V3
required
20
minutes
and
a
technician.
Users
put
on
a
“headband,”
a
device
that
looks
like
a
set
of
headphones,
insert
a
set
of
pre-­‐lubricated
earbuds
into
their
ears
and
then
wait
four
minutes
for
the
device
to
custom-­‐shape
them.
Users
then
remove
the
headphones
and
release
the
moulded
earbuds.
The
various
“inside”
technologies
are
inserted
to
turn
the
earpiece
into
a
hearing
aid,
hearing
protec2on
or
earphones.
Like
the
V3
earpiece,
V4
provides
an
acous2c
seal.
Ambient
noise
is
greatly
reduced,
making
any
amplified
sound
clear
at
low
volumes.
Sonomax
Inside
Sonomax
also
develops
components
that
go
inside
the
earplugs:
speakers
for
earphones
and
hearing
aids
and
filters
for
industrial
hearing
protec2on.
Perhaps
the
most
exci2ng
“inside”
product
that
Sonomax
is
developing
is
a
microphone
for
two-­‐
way
communica2on
called
“talk
through
the
ear.”
This
could
be
the
innova2on
that
improves
the
sound
quality
of
Bluetooth.
NEW
BUSINESS
MODEL
AND
NEAR
TERM
STRATEGY
Sonomax
envisions
licensing
the
perfect
fit
to
mul2ple
manufacturers
for
a
wide
range
of
uses.
The
company
has
abandoned
manufacturing.
It
will
focus
on
research
and
product
development
for
partners.
Sonomax
will
make
its
money
through
licensing
and
royalty
fees
for
its
patented
products.
We
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
4
The
self-­‐fiRng
V4
-­‐
The
user
puts
on
the
headset,
presses
a
buUon
to
inject
the
silicon
and
waits
four
minutes.
Then
the
filter
(hearing
protec.on),
microphone
(telephone),
or
speaker
(earphones)
is
inserted
into
the
back
of
each
moulded
earpiece
The
most
exci.ng
inside
product
under
development
is
“talk
through
the
ear,”
which
could
be
the
next
step
in
Bluetooth
are
pleased
with
this
decision
and
its
early
progress.
It
is
much
less
capital
intensive
and
consequently,
lower
risk.
Sonomax
has
approached
both
the
key
Original
Equipment
Manufacturers
(OEMs)
and
the
Original
Design
Manufacturers
(ODMs)
that
supply
them.
It
has
signed
its
first
collabora2on
agreement
with
Dynamic
Ear
Company
of
Netherlands
to
develop
earphones.
The
first
products
to
be
licensed
under
the
new
business
model
will
likely
be
Sonomax’s
branded,
proven
Soundcage
headphones
(consumer)
and
Sonomax
Hearing
Protec2on
Devices
(industrial).
We
expect
that
one
ODM
will
be
chosen
to
manufacture
and
distribute
both
products.
Sonomax
will
contribute
the
brand
and
technology
and
collect
a
per
unit
royalty.
These
products
should
enable
the
company
to
book
licensing
revenue
as
early
as
the
fourth
quarter
of
2010.
The
company
knows
the
industrial
market.
Sonomax
has
built
a
network
of
independent
distributors
who
have
successfully
marketed
V3
hearing
protec2on
to
BHP
Billiton,
Alcoa,
Rio
Tinto
and
others.
The
ODM
would
contribute
manufacturing,
distribu2on,
financial
strength
and
management,
while
Sonomax
would
contribute
its
branded
product,
a
network
of
distribu2on
agents
and
a
customer
list.
Distribu2on
of
industrial
safety
products
is
dominated
by
fewer
than
30
companies
worldwide,
such
as
Arco
in
the
U.K.
and
Grainger
in
the
U.S.
Sonomax
knows
the
distributors
and
has
worked
with
many
of
them
already.
Its
new
product
has
a
number
of
advantages
over
its
past
HPD
product.
• Beher
product
-­‐-­‐
easier
and
faster
to
fit
• Lower
price
-­‐-­‐
the
price
is
expected
to
be
U.S.
$60,
compe22ve
with
a
year’s
supply
of
foam
earplugs
and
less
than
half
the
price
of
its
V3
HPD
• Higher
margin
for
the
distributor
-­‐-­‐
50%
versus
30-­‐35%
for
foam
earplugs
• Financial
strength
of
an
ODM
to
compete
against
major
players
and
distributors
We
expect
Sonomax’s
agreement
for
industrial
HPD
will
be
geographically
exclusive
to
key
distributors
who
dominate
that
marketplace.
On
the
consumer
side,
the
company
plans
to
follow
a
similar
strategy
with
its
Soundcage
headphones,
which
feature
quality
speakers
and
a
custom
fit.
Sonomax
will
license
its
V4
self-­‐fiJng
technology
to
an
ODM,
which
will
manufacture
and
distribute
the
custom
headphones
to
key
high
volume
resellers.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
5
Sonomax
will
market
its
technology
and
collect
licensing
fees
from
its
former
compe.tors
Industrial
strategy
will
feature
an
exclusive
license
to
produce
Sonomax-­‐
branded
hearing
protec.on.
Sonomax
will
contribute
its
distribu.on
network,
customer
list
and
technology
in
return
for
a
royalty
A
major
difference
between
the
industrial
and
consumer
segments
is
mul2ple
layers
of
distribu2on.
Under
the
consumer
strategy
proposed
by
Sonomax,
we
expect
the
customers
to
be
large
distributors,
most
of
which
will
employ
sub-­‐distributors
that
sell
to
retail
stores.
Three
layers
of
distribu2on
between
Sonomax/
ODM
and
the
end
consumer
will
increase
the
price,
but
also
increases
our
confidence
that
a
rela2vely
new
product
will
make
it
onto
the
shelves
in
volume.
We
believe
that
the
combina2on
of
a
deep-­‐pocketed
partner,
a
proven
sales
force
and
the
self-­‐fiJng
V4
product
will
translate
into
success.
At
retail
price
points
between
US
$99
-­‐
$149,
we
think
the
offering
will
be
very
ahrac2ve.
POTENTIAL
MARKETS
AND
PRODUCTS
IN
DEVELOPMENT
Consumer
The
consumer
market
holds
the
greatest
volume
poten2al,
with
about
one
billion
music
playing
devices
such
as
MP3
players,
iPods
and
smart
phones
worldwide.
Sonomax
es2mates
that
the
poten2al
market
for
a
premium
earpiece
is
in
the
range
of
60
million
units
and
growing
rapidly.
It
includes
earbuds
and
smartphone
headsets.
The
company
plans
to
offer
product
directly
to
the
OEMs
and
into
the
earphone
aqermarket.
Aqermarket
earpiece
sales
ring
in
at
about
40
per
cent
of
device
sales
or
400
million
units.
Sonomax
plans
to
make
the
V4
fit
available
under
license
to
all
manufacturers
of
earphones.
The
company
is
working
on
two
very
high-­‐poten2al
smart
phone
proposals
that
could
prove
to
be
home
runs
in
the
next
two
years.

Next-­‐genera+on
Bluetooth:
Bluetooth
earpieces
have
two
drawbacks,
fit
and
sound
quality.
The
device
is
either
uncomfortable
or
not
secure
in
the
ear,
and
the
sound
quality
for
the
person
on
the
other
end
of
the
call
is
poor.
Sonomax’s
new
product
will
use
the
moulded
earpiece
to
provide
an
acous2c
seal
and
a
microphone
that
also
acts
as
a
receiver.
Incoming
messages
are
relayed
directly
into
the
user's
ear,
so
they
are
not
distorted
by
surrounding
noise.
Outgoing
spoken
messages
travel
internally
through
a
natural
canal
connec2ng
the
ear
to
the
mouth,
allowing
the
message
to
bypass
surrounding
noise.
This
product
provides
beher-­‐quality
sound
than
wired,
hands-­‐free
equipment
or
wireless
Bluetooth
earpieces.
The
key
to
making
it
work
is
the
acous2c
seal
from
the
earpiece.
This
could
represent
the
next
step
in
Bluetooth
technology
as
well
as
being
ideal
for
Sonomax’s
military
and
first
response
(fire,
ambulance,
police)
customers.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
6
Talk
through
the
ear
is
one
of
Sonomax’s
most
exci.ng
new
technologies.
The
earpiece
also
contains
a
microphone
that
picks
up
sound
inside
the
ear.
This
technology
is
proven
with
security/military/police.
V4
fit
makes
it
affordable.

Talk
through
your
earphone:
This
is
a
wired
product
that
will
allow
a
user
to
toggle
between
listening
to
music
and
talking
on
the
phone.
It
will
include
the
custom-­‐fihed
earpiece,
an
in-­‐ear
microphone
and
a
control
toggle.
In
both
cases,
the
sound
quality
will
be
high
and
consistent.
This
will
aid
greatly
in
improving
the
effec2veness
of
voice-­‐ac2vated
commands.
In
the
consumer
space,
the
obvious
customers
are
the
original
equipment
manufacturers
such
as
RIM,
Apple,
Nokia,
Monster,
Etymo2c
and
Sennheiser.
Customers
may
also
be
the
original
design
manufacturers
(ODMs)

companies
such
as
GN
Netcom,
Cresyn
and
Nypro
or
component
manufacturers
like
ST
Microelectronics,
Knowles,
and
NXP.
Industrial
Noise-­‐induced
hearing
loss
is
the
number
one
occupa2onal
health
hazard
for
industrial
workers.
We
understand
that
there
are
100
million
workers
at
risk
in
industrialized
countries
alone.
Sonomax
es2mates
this
market
at
$1
billion
and
the
poten2al
market
for
its
premium
HPDs
at
10
million
units.
Here,
too,
it
is
working
on
some
new
products:

Noise
reduc+on
selec+on

U.S.
and
Canadian
legisla2on
requires
hearing
protec2on
to
limit
the
sound
inside
the
earplug
to
75-­‐80
decibels.
If
it
is
lower,
workers
will
not
be
able
to
hear
anything.
To
achieve
the
75-­‐80
db
inside,
technicians
measure
workplace
noise
and
select
the
appropriate
filter.
However,
some
parts
of
a
workplace
may
be
noisier
than
others.
Sonomax’s
new
product
comes
with
all
the
filters
installed
and
a
dial
for
the
worker
to
select
the
appropriate
filter
for
the
surroundings.

Automa+c
noise
reduc+on
selec+on
-­‐-­‐
This
product
measures
surrounding
noise
levels
and
automa2cally
selects
the
level
of
noise
reduc2on
to
provide
75-­‐80
db
of
in-­‐ear
sound.
Military
and
First
Response
Hearing
loss
is
also
a
serious
problem
for
soldiers.
Hearing
loss
is
the
number
one
ailment
of
troops
returning
from
Afghanistan
and
Iraq.
As
well,
communica2on
is
cri2cal
in
the
military.
Sonomax’s
V3
earpieces
are
currently
fihed
with
“talk
through
the
ear”
technology
in
use
by
the
armed
forces
in
Germany,
U.K.,
Sweden
and
Australia.
Sonomax
believes
that
a
lower
cost,
more
convenient
V4
op2on
will
be
welcome.
This
market
is
es2mated
at
$1
billion.
Sonomax
es2mates
the
poten2al
for
such
military
products
at
50
million
units
for
first-­‐2me
equipping
and
5
million
units
a
year
thereaqer.
Military
procurement
goes
directly
through
the
contractor:
Nacre,
Racal,
ITT,
Raytheon
and
Halliburton,
to
name
just
a
few.
First
responders
-­‐-­‐
fire,
ambulance
and
police
-­‐-­‐
would
also
be
interested
in
similar
products.
Motorola
is
by
far
the
dominant
player.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
7
Hearing
aids
Worldwide
sales
are
9
million
units
a
year
represen2ng
a
$2
billion
market.
WHO
es2mates
278
million
people
worldwide
need
hearing
aids;
35
million
per
year
in
developing
countries.
Given
economic
and
personal
reasons,
the
poten2al
market
could
be
as
much
as
10
million
units.
Sonomax
believes
its
moulding
technology
makes
it
easier
and
faster
to
fit
pa2ents,
making
hearing
aids
more
affordable.
Sonomax
figures
its
poten2al
share
could
be
20
million
units.
ROYALTY
INCOME
OUTLOOK
Most
component
providers
sell
their
products
either
on
a
per
unit
price
or
as
a
percentage
of
net
revenue.
Companies
producing
the
key
components
for
the
most
popular
products
have
the
nego2a2ng
power
to
command
more
than
5%
of
net
sales.
Management
expects
per
unit
royal2es
for
custom-­‐moulded
earpieces
in
the
range
of
$2
-­‐
$5
per
pair,
with
similar
royal2es
on
“inside”
components.
Consumer
1.6
billion Annual
wireless
phone
&
MP3
player
units
387
million Annual
unit
sales
of
earphones
&
Bluetooth
60
million Annual
unit
sales
of
premium
earphones
&
Bluetooth
$7
million Near
term
poten2al
revenue

3
million
units
X
$2.50
$50
million 5
year
poten2al
revenue
-­‐
20
million
X
$2.50
Industrial
100
million Industrial
workers
in
developed
countries
1
million Es2mated
market
for
premium
ear
protec2on
$5
million Near
term
market

1
million
units
X
$5.00
$50
million 5
year
poten2al
-­‐
10
million
units
X
$5.00
Military
20
million Ac2ve
military
$25
million 5
year
poten2al
-­‐
5
million
units
X
$5.00
Medical
278
million People
in
need
of
hearing
aids
9
million Annual
unit
sales
of
hearing
aids
$10
million 5
year
poten2al
2
million
units
X
$5.00
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
8
Source:
Sonomax
REVENUE
POTENTIAL
We
believe
the
product
quality,
proposed
pricing
and
channel
strategy
are
strong
enough
that
customers
will
embrace
Sonomax’s
industrial
hearing
protec2on
products
and
Soundcage
earphones.
We
expect
the
company
to
book
revenue
this
year
from
the
industrial
segment
and
possibly
from
Soundcage
earphones
as
well.
Our
2011
revenue
forecast
is
$13.5
million
and
hinges
on
one
very
crucial
assump2on:
that
the
company
signs
a
marke2ng
and
manufacturing
agreement
with
an
ODM
on
favourable
terms.
Looking
to
2012
and
beyond
we
expect
con2nued
growth.
We
understand
the
proposed
price
for
hearing
protec2on
devices
is
$60,
which
is
cheaper
than
the
es2mated
cost
of
a
one-­‐year
supply
of
foam
earplugs.
Management
believes
that
price
point
leaves
$5
as
a
Sonomax
royalty,
$20
to
cover
manufacturing
and
$35
to
cover
marke2ng.
The
proposed
marke2ng
commission
of
50%
would
be
higher
than
the
30-­‐35%
distributors
earn
on
foam
earplugs
or
the
40-­‐50%
they
earn
on
most
safety
products.
Consequently,
we
believe
Sonomax
can
exceed
the
volumes
achieved
when
it
first
introduced
its
V3
technology
in
2007,
in
the
range
of
60,000
units.
Sonomax’s
industrial
revenues
could
grow
rapidly.
The
company’s
near-­‐term
forecast
from
this
segment
is
one
million
units
and
$5
million
in
revenue.
A
combina2on
of
factors
make
the
ongoing
revenue
outlook
quite
ahrac2ve.
The
price
point
is
affordable,
the
delivery
is
fast
and
legisla2on
mandates
annual
hearing
safety
educa2on,
giving
a
distributor
ongoing
customer
access.
The
company’s
near-­‐term
consumer
sales
forecast
of
2
-­‐
3
million
units
of
Soundcage
Earphones
seems
quite
ambi2ous.
With
the
layers
of
distribu2on
in
the
consumer
channel
and
the
ability
of
top-­‐level
distributors
to
move
product,
the
first
order
could
be
as
much
as
200,000
units.
With
success,
we
expect
comparable
or
larger
follow-­‐up
orders
across
three
price
points.
The
company
has
signed
its
first
collabora2on
agreement
(Dynamic
Ear
Company
in
Netherlands)
and
is
working
on
more.
We
believe
that
a
custom
fit
is
an
appealing
op2on
for
premium
earphones.
The
2011
es2mate
includes
only
Sonomax/Soundcage
branded
products.
We
believe
revenue
growth
in
2012
and
beyond
will
come
from
securing
addi2onal
license
agreements
and,
transla2ng
these
rela2onships
into
products
and
revenue.
COMPETITION
Three
main
systems
compete
with
V4
custom
fit
ear
pieces:
Custom
fit
by
professional
impression,
offered
by
Westone,
Phonak,
Etymo2c
Research,
Ul2mate
Ears
and
ACS;
customized
by
choice
of
inserts,
offered
by
Klipsch,
Sennheiser,
Monster,
Koss,
SHURE
and
YURBuds;
and
custom
fit
by
self-­‐moulding,
offered
by
Radians
Do-­‐It-­‐Yourself
Custom.
None
offer
the
combina2on
of
value,
performance
and
simplicity
that
Sonomax
does.
V4
is
faster,
easier,
automa2c,
offers
instant
gra2fica2on,
has
less
opportunity
for
error
and
is
compara2vely
inexpensive.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
9
A
small
highlight
of
why
we
think
they
have
excellent
revenue
poten.al
MANAGEMENT
Nick
Laperle,
President
&
CEO,
Co-­‐Founded
the
company
in
1998.
The
key
people
are
s2ll
with
the
company.
The
company’s
main
supplier,
Silcotech
a
moulder
of
silicon,
helped
when
the
company
began
and
con2nues
to
work
closely
with
Sonomax.
We
are
very
impressed
with
the
commitment
of
the
management
team
and
their
technological
accomplishments.
Along
with
the
custom
earbuds,
Sonomax
developed
hearing
safety
measurement
soqware
to
demonstrate
the
effec2veness
of
its
industrial
products.
It
is
now
the
leading
soqware
in
workplace
hearing
safety.
The
company
realized
$3
million
on
the
sale
of
this
technology.
We
believe
management
knows
the
industrial
safety
market
very
well.
We
expect
its
technical
team
can
develop
innova2ve
products
that
will
appeal
to
consumers
and
original
equipment
manufacturers.
CAPITAL
STRUCTURE
AND
DILUTION
The
company
has
posi2ve
working
capital
and
a
modest
amount
of
debt.
However,
it
may
need
to
raise
funds
before
revenue
begins
flowing.
Sonomax
has
about
67
million
warrants
outstanding
with
an
exercise
price
of
$0.05,
which
increases
to
$0.10
this
fall.
This
could
result
in
receipt
of
$3.4
million
if
all
the
warrants
are
exercised
at
$0.05.
Capital
structure
as
of
Dec.
30,
2009,
pro-­‐forma
figures
in
millions
CAD
Working
capital
$ -­‐0.7
Debt
$ nil
Shares
outstanding 250.7
Warrants 66.5
Op2ons 20.1
Fully
diluted 351.7
VALUATION
At
this
point
the
poten2al
value
of
the
company
is
its
“op2onality”
-­‐-­‐
its
risk-­‐weighted
poten2al
return,
rather
than
a
mul2ple
of
earnings
or
discounted
cash
flow.
The
best
valua2on
metric
investors
can
assess
is
Sonomax’s
market
capitaliza2on
rela2ve
to
its
products
and
ability
to
execute
a
range
of
market
opportuni2es.
The
ul2mate
value
will
probably
be
determined
in
a
sale
of
the
company.
Likely
buyers
could
be
an
Original
Equipment
Manufacturer
that
wants
to
keep
the
technology
from
compe2tors.
Alterna2vely,
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
10
the
buyer
could
be
an
intellectual
property
company
or
private
equity
fund.
In
any
event,
the
value
would
be
determined
by
an
evalua2on
of
the
patents,
compe2ng
products
and
poten2al
revenue.
There
are
a
number
of
intellectual
property
companies
that
trade
at
much
higher
valua2ons
than
Sonomax.
Qualcomm
Inc.
develops
technologies
and
is
a
key
supplier
to
the
wireless
industry.
Wi-­‐Lan
Inc.
and
Mosaid
Technologies
Inc.
are
intellectual
property
licensing
companies.
All
have
large
patent
porjolios
and
generate
significant
revenue.
For
the
laher
two,
spending
on
li2ga2on
represents
a
major
expense,
especially
in
the
case
of
Wi-­‐Lan.
Share
Price Market
Cap
Enterprise
Value/ P/E
($) (millions
CAD) Revenue
Qualcomm
Inc.
(U.S.$) 35.56 59,456 5.6 18.9
Wi-­‐Lan
Inc. 3.09 314.6 11.9 28.0
Mosaid
Technologies
Inc. 19.17 197.5 3.8 10.7
Sonomax
Technologies
Inc.* 0.055 13.5 1.0 2.8
*Based
on
revenue
of
$13.5
million
in
2011.
Under
the
company’s
new
strategy,
margins
should
be
strong
and
success
will
fall
to
the
bohom
line.
Monthly
expenses
are
roughly
$150,000.
With
success,
we
expect
a
slight
increase
in
G&A
and
rising
Research
&
Development
spending.
In
2011,
an
es2mated
$13.5
million
in
revenue
should
translate
into
roughly
$10
million
in
pre-­‐tax
income.
With
the
recent
sale
of
tax
losses,
we
would
expect
this
amount
to
be
fully
taxable
in
2011
at
a
rate
of
25-­‐30%,
resul2ng
in
net
income
of
$7
million,
or
$0.02
per
share,
fully
diluted.
We
expect
growth
beyond
2011
but
are
not
offering
es2mates.
We
believe
Sonomax
warrants
a
valua2on
of
2.5
2mes
es2mated
revenue
and
6.0
2mes
es2mated
earnings.
These
mul2ples
are
considerably
less
than
peers,
reflec2ng
uncertainty.
Averaging
the
two
calcula2ons
results
in
a
valua2on
of
$0.10
per
share.
As
the
company
passes
milestones
and
the
revenue
picture
becomes
clearer
the
shares
will
deserve
higher
mul2ples
on
revenue
and
earnings.
The
performance
of
Sonomax
shares
depends
on
the
2ming,
terms
and
rollout
of
an
agreement
with
an
ODM.
A
favourable
agreement
should
translate
into
more
revenue
than
the
company
has
ever
generated.
We
expect
the
share
price
will
respond
favourably
as
the
revenue
poten2al
of
licensing
and
collabora2on
agreements
becomes
clear.
Milestones
to
Watch
An
agreement
with
an
ODM
is
the
first
step.
The
ini2al
announcement
will
be
followed
by
announcements
outlining
the
scope
and
poten2al
in
more
detail.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
11
The
next
milestone
is
product
launch
announcements.
We
hope
to
see
launch
announcements
for
Industrial
HPDs
and
Soundcage
earphones.
Finally,
we
look
forward
to
announcements
of
first
sales
and
deliveries.
RISKS
Licensing
agreements:
The
company
must
nego2ate
ahrac2ve
agreements
with
ODMs
and
OEMs.
Market
acceptance:
The
greatest
risk
to
Sonomax
is
its
ability
to
generate
revenue
under
its
new
business
plan.
Its
new
V4
and
inside
technologies
need
to
deliver
superior
performance
at
a
compe22ve
price.
Financing:
While
Sonomax
has
some
cash,
thanks
to
a
recent
financing,
there
is
a
ques2on
of
whether
it
can
raise
the
money
needed
to
sa2sfy
all
of
its
obliga2ons
and
s2ll
grow.
Li2ga2on:
Licensing
companies
can
spend
heavily
on
legal
fees
to
defend
their
patents.
Dilu2on:
The
company
has
88
million
outstanding
warrants.
While
the
exercise
of
the
warrants
will
bring
much-­‐needed
cash,
investors
may
in
turn
sell
some
of
the
shares
to
take
some
money
off
the
table.
Currency:
We
cite
Canadian
dollars
throughout
the
report.
The
company
may
nego2ate
revenue
contracts
in
other
currencies
although
its
costs
and
repor2ng
are
in
Canadian
dollars.
SCORECARD
1) Does
the
technology
work?
Yes
it
does.
We
have
used
the
earphones
and
find
them
superior
to
other
small
earphones.
We
also
found
that
the
hearing
protec2on,
even
without
filters
reduce
sound
beher
than
foam
plugs.
2) Is
the
technology
a
must
have?
On
the
industrial
side,
we
expect
demand
to
be
strong
based
on
the
effec2veness,
price
and
ease
of
use.
However,
many
workers
do
not
appreciate
the
need
to
protect
their
hearing.
On
the
consumer
side,
we
believe
affordable
fit
and
quality
will
find
a
market.
3) Can
management
execute?
Management
understands
their
markets
and
has
a
strategy
that
plays
to
their
strengths.
We
will
have
more
confidence
once
its
first
licensing
agreement
is
announced.
4) Can
the
company
finance
its
growth
with
minimal
dilu2on?
This
depends
on
execu2on.
We
expect
the
shares
to
rise
on
an
ODM
agreement
and
ini2al
orders.
With
such
strength,
we
could
see
some
warrants
exercised,
avoiding
the
need
for
addi2onal
equity.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
12
CONCLUSION
We
believe
that
Sonomax
has
the
credibility
to
nego2ate
agreements
to
manufacture
and
distribute
its
earphones
and
industrial
hearing
protec2on.
We
expect
the
company
will
report
revenue
in
2010,
giving
it
the
staying
power
to
develop
its
home-­‐run
products.
Sonomax
has
cut
costs
and
refocused
its
efforts
on
its
core
research
and
development.
If
the
company
can
nego2ate
the
right
deal,
it
could
be
on
track
to
$13.5
million
in
revenue
next
year
and
substan2al
profitability.
Management
is
commihed
and
believes
such
an
agreement
is
realis2c.
For
those
cognizant
of
the
challenges
of
new
products
and
strategies,
our
recommenda2on
is
buy.
We
believe
that
Sonomax
has
some
poten2al
winners
and
that
the
shares
will
jump
on
a
commercial
announcement.
Our
12-­‐month
target
price
is
$0.10.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
13
Disclaimer
The
informa2on
contained
in
this
document
is
based
on
material
obtained
from
what
are
deemed
to
be
reliable
sources,
but
no
guarantee
or
promise,
explicit
or
implicit,
is
given
as
to
the
accuracy
and
exhaus2veness
of
these
sources.
This
report
shall
under
no
circumstances
be
considered
an
offer
to
buy
or
sell,
or
a
request
to
buy
and/or
sell
the
stocks
men2oned.
Capital
Ideas
and/or
its
officers,
directors,
representa2ves,
traders
and
members
of
their
families
may
hold
posi2ons
in
the
stocks
men2oned
in
this
document
and
may
buy
and/or
sell
these
stocks
on
the
market
or
otherwise.
Analyst
compensa4on:
Capital
Ideas
was
paid
a
fee
to
write
and
disseminate
this
report.
In
order
to
ensure
independence,
client
companies
must
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There
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Capital
Ideas
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accept
payment
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such
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stock
op2ons,
or
deferred
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Capital
Ideas
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not
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financial
advisor,
fiscal
agent
or
underwriter
for
companies
men2oned
in
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The
opinions,
es2mates
and
projec2ons
contained
herein
are
those
of
the
author
as
of
the
date
hereof
and
are
subject
to
change
without
no2ce.
Analyst
disclosure:
The
research
analyst
who
prepared
this
report
cer2fies
that
this
report
accurately
reflects
his
or
her
opinion
of
the
subject
securi2es.
The
analyst
cer2fies
that
no
part
of
his
or
her
compensa2on
was,
is
or
will
be
directly
or
indirectly
related
to
the
specific
recommenda2ons
or
views
expressed
in
this
report
with
regard
to
the
securi2es
or
companies
found
herein.
Stock
Ra4ng
Terminology:
Buy:
The
stock
is
expected
to
outperform
its
peer
group
over
the
next
12
months
or
longer
Hold:
The
stock
is
expected
to
perform
in
line
with
its
peer
group
over
the
next
12
months
Sell:
The
stock
is
expected
to
underperform
its
peer
group
over
the
next
12
months
Our
stock
ra2ngs
may
be
followed
by
“(S)”
which
denotes
that
the
investment
is
specula2ve
and
has
a
higher
degree
of
risk
associated
with
it.
The
company
may
be
subject
to
factors
that
involve
high
uncertainty
and
these
may
include
but
are
not
limited
to:
balance
sheet
leverage,
earnings
variability,
management
track
record,
accoun2ng
issues,
and
certain
assump2ons
used
in
our
forecasts.
About
Capital
Ideas
Capital
Ideas
provides
research
reports
on
companies
that
have
difficulty
a_rac4ng
dealer
coverage
and
investor
a_en4on.
We
are
paid
by
the
issuers
we
cover,
and
maintain
independence
by
obtaining
payment
in
full
prior
to
beginning
work.
We
accept
only
cash
as
payment.
We
abide
by
the
strictest
ethics
and
subscribe
to
the
CFA
Ins4tute’s
code
of
conduct.
We
hire
only
experienced
and
upstanding
analysts
to
research
and
write
our
reports,
which
we
distribute
through
a
variety
of
public
and
proprietary
channels.
Sonomax
Technologies
Inc.
Capital
Ideas
-­‐
14
Archives

Sonomax Technologies Featured In Episode 2 Of The Next Biggest Winner TV Show
March 19, 2013

Sonomax Adding to Intellectual Property Pipeline, Expanding Relationship with ValueLink Holdings Ltd
March 19, 2013

Nick Laperle Interview on CJAD
February 22, 2013

SONOMAX SIGNS EXCLUSIVE STRATEGIC INVESTMENT AGREEMENT FOR THE SALE OF 51% OF ITS INTELLECTUAL PROPERTY
November 22, 2012

Self-Fit Hearing Protection Device Launched
October 23, 2012

Evolution is Now a Revolution
October 20, 2012

Fry’s Electronics Carrying eers™
August 16, 2012

SONOMAX® Signs LOI with High End Audio Brand KLIPSCH
June 11, 2012

BHP Billiton Expands Hearing Protection Contract in Australia
May 07, 2012

OEM Agreement with Altec Lansing
April 18, 2012

Sonomax® Announces eers™ Custom Fit Earbuds Distribution and Logistics Agreement with Navarre
March 16, 2012

New eers™ Custom Fit Earbuds Available for Purchase
March 09, 2012

Sonomax Technologies Corporate Update
February 22, 2012

Sonomax® Announces New Creative Director, Arabian Prince
January 06, 2012

Enter the sculpted eers™ Get Fit with a Friend Giveaway
December 19, 2011

The Source announces exclusive availability of sculpted eers™
December 19, 2011

sculpted eers™ Custom Headphones Announce Availability at Guitar Center Manhattan Award-winning Sonomax® sculpted eers™ custom headphones launch at Guitar Center Manhattan
December 09, 2011

sculpted eers™ Custom Headphones Debut at J&R Stores in Downtown NY
November 25, 2011

sculpted eers™ custom-fitted earphones are now available at the B&H Photo NY Superstore
November 23, 2011

Sonomax® and sculpted eers™ announces Sponsorship of the Last Damn Show Concert
November 18, 2011

Sonomax needs your vote
November 11, 2011

The World Technology Summit & Awards 2011 Video
November 14, 2011

Tampa Bay Welcomes Sonomax® sculpted eers™
November 16, 2011

Listen up! Sonomax® Custom Molded Earphones Receive CES Innovation 2012 Design and Engineering Award
November 09, 2011

Latest review of our sculpted eers
November 01, 2011

Sonomax Technologies Inc. Announces $1.5 Million First Closing of Private Placement
November 01, 2011

Sonomax Technologies Announces Licensee Launch
November 01, 2011

« The Bionic Ear »
October 31, 2011

Sculpted eers hot sellers
September 20, 2011

Update on Key Initiatives
September 15, 2011

Custom Molded Earphones Preorders now Shipping
September 15, 2011

AGM 2011 Audio And Video Replay
July 11, 2011

Sonomax Reports First Quarter 2011 Results
June 30, 2011

Toronto Welcomes sculpted eers™
June 28, 2011

License Agreement with Skullcandy for SonoFit™ Technology
June 21, 2011

Annual General Meeting Reminder
June 17, 2011

Award-Winning sculpted eers™, Launch in Canada
June 13, 2011

Custom Molded Earphones Now In Pre-Order Phase
June 09, 2011

ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
June 09, 2011

Sonomax Announces Retail Launch Partners for sculpted eers™
March 30, 2011

Popular Science Reviews sculpted eers™
March 04, 2011

"Le mur du son" - An Article Published In LA PRESSE
March 03, 2011

DR VOIX
February 14, 2011

sculpted eers on TV Show M.Net - Musiqueplus
February 09, 2011

Dr. Voix Discusses the Bionic Ear at TV Show "C'est ça la vie"
February 08, 2011

CNET Sculpted eers First look
January 05, 2011

Press Gets First Look At Unveiled
January 05, 2011

Montreal’s Sonomax causes a stir at CES Unveiled
January 05, 2011

Sonomax into TOP 10 of Last Gadget Standing
December 28, 2010

lotus823 Announces Signing of New Client: Sonomax Technologies, Inc.
December 01, 2010

Sonomax Selected as CES Innovation 2011 Design and Engineering Award Honoree
November 09, 2010

Sonomax-ÉTS Industrial Chair
November 18, 2010

Sonomax Launches Retail Channel Initiative with Help from the Leading Consumer Electronics Sales
November 25, 2010

Featured Note from Industrial Alliance
November 29, 2010

Analyst Report SHH,V October 2010
November 08, 2010

i-stage presentation
October 19, 2010

Sonomax Signs R&D License Term Sheet with Esterline Racal Acoustics for Worldwide Military Market
June 17, 2010

Sonomax Signs V4 R&D License Term Sheet with Addvantech Limited
June 17, 2010

Sonomax Signs Licensing Deal with Creare
June 15, 2010

Sonomax Signs MOU for University Chair in Auditory Research
June 09, 2010

Sonomax Announces the “ SHOW ME” AGM
December 31, 1969

Analyst Report SHH,V June 2010
December 31, 1969

Javier San Juan joins Sonomax Technologies board of directors
June 04, 2010

Sonomax conference call update additional agenda item
February 03, 2010

Vegas show a big deal for Sonomax
January 05, 2010

Sonomax Announces Success of Critical Phase II Milestone
January 04, 2010

Sonomax Announces Phase I Success
January 04, 2010

Sonomax will be at the CES show in Las Vegas from Jan 7th to Jan 10th
January 04, 2010

Sonomax U.K. Lands Military Contract
January 04, 2010

Sonomax Meets Phase V Milestone
January 01, 2010

Sonomax Meets Phase IV Milestone
January 01, 2010

Sonomax Meets Phase III Milestone
October 13, 2009

Sonomax Signs $1 Million Africa Licensing Agreement
October 19, 2009

Sonomax Closes $1.0 Million Fully-Subscribed Private Placement
September 03, 2009

More >>