DJzone DJ Magazine

In December Loud Technologies Inc. parent company of Mackie announced its key Chinese supplier, which makes about a third of the company’s audio and musical products, has stopped making its products.

Officials at the Woodinville music company (NASDAQ: LTEC) said the Chinese supplier, which is experiencing financial difficulties, has been making Loud products for eight years, and products it made represented 35 percent of Loud’s net sales in 2007 and 32 percent for the first six months of 2008.

Without those sales, Loud said it expects a “significant decline” in net sales in 2009, especially in the first and second quarters. Loud said it will try and obtain custom tooling used by the Chinese supplier to try and transfer the tooling to another manufacturer within the next four months. If it can’t obtain the tooling, it will take up to another four months to obtain new tooling and being manufacturing again.

The company warned that in addition to much lower 2009 net sales, it may not be able to comply with terms and conditions of its senior credit facility; may not have enough cash flow to meet its cash requirements; potential customers may choose a competitor’s product instead of waiting for Loud’s; and may have difficulties finding a new manufacturer.

As of today Loud said it will voluntarily withdraw its shares from listing on the NASDAQ stock exchange, a move that will take effect sometime in early February.

Officials at the Woodinville music products company (NASDAQ: LTEC) cited several reasons for the move, including high costs for continued stock exchange listing, management time to maintain listing, limited trading in the company’s shares, the chance that Loud won’t meet minimum exchange requirements in the future, and the lack of analysts who cover the company’s stock.

Loud is currently not complying with one NASDAQ requirement because it is late filing a 10-Q report with the Securities and Exchange Commission.

“The burden in time and costs associated with public reporting obligations have a real effect on our results. In addition, due to our small market capitalization, we have not enjoyed many of the benefits traditionally associated with a NASDAQ listing,” said Rodney Olson, CEO, in a statement.