email letter from Roger Sanders (formerly known as InnerSound

Hi Mart,
Thank you for contacting me and requesting the facts regarding my leaving innersound, LLC.Â I'll give you a brief historical perspective followed by my comments.Â Unless I state otherwise, everything is fact, not opinion.
I have been developing electrostatic loudspeaker designs and their integration with dynamic woofers since 1972.Â The first of several articles on these subjects was published in 1974 in The Audio Amateur magazine.
As time passed, my designs improved, and I published more articles and became internationally known for my work, I was eventually commissioned to write a book on the subject.Â The Electrostatic Loudspeaker Design Cookbook was published in 1994.
The book sold well and it generated several offers to produce a commercial product.Â I decided to partner with Raj Varma, an audiophile from the U.K. who agreed to finance a new company.Â InnerSound, Inc. was founded in 1996.
Raj lived in Europe while InnerSound operated in Georgia.Â Raj left me to operate the entire operation in the U.S.
I did the R&D, design work, marketing, accounting, and manufactured the Eros and Isis ESL/TL hybrid speakers.Â I produced these in our Whitesburg Georgia factory until January 2003.
Due to the difficulties amplifiers experience when driving ESLs, I also arranged for the design and production of an amplifier that could drive ESLs exceptionally well.Â The solid state "Electrostatic Amplifier" (or ESL Amp as it was commonly called) was the result.Â Due to popular demand, I eventually added an exceptionally user-friendly preamp to the line.
I also developed speaker cables that were specifically designed for the unique demands of ESLs.Â We produced these in-house and also added high-performance, reasonably-priced interconnects to the line.
By 2002, I had built Innersound, Inc. into a productive company, but due to the recession, money became tight.Â This prevented me from expanding into new products that I had developed, like center channel speakers, surround speakers, video processors, and unique tube amps and preamps.Â So when in late 2002, Gary Leeds offered to buy the company so it could progress, I was very interested.
Mr. Leeds is a multi-millionaire (by inheritance), and was very good at marketing.Â I felt that with his money and marketing skills, Innersound could become a serious player in the audio industry.Â So Raj and I agree to sell the company to him.Â At Mr. Lead's insistence, we moved the operation to Boulder Colorado, where he dissolved the original InnerSound, Inc. and started innersound, LLC. in February 2003.
Mr. Leeds agreed to transfer my financial investment in InnerSound, Inc., to innersound, LLC. and that we would be equal partners where he would do the marketing and I would handle production.Â However, he demanded that he be "more equal" by having 51% of the shares while I had 49% of them.Â By doing so, he assured himself that he could keep control of his money and have the final word in all corporate decisions.Â While I was concerned about this, he wouldn't have it any other way, so I accepted his offer.
Once the company moved to Colorado and there was no turning back, Mr. Leeds immediately demanded and took total control of the company.Â He would not allow me or anyone else to make any decisions or handle any aspect of operations.Â He micromanaged everything.Â He constantly changed the design of our products, making it impossible to stabilize any design so that it could be produced.
His most perplexing decision was his refusal to open a speaker factory.Â He insisted that everything could be out-sourced and that all innersound needed was a sales office.
I won't bore you with the enormous impact and details associated with this momentous decision.Â I'll simply state that out-sourcing highly-specialized speakers doesn't work and that as a result, we could not produce any product.Â With no income, significant operational expenses, and many false production starts, innersound quickly began to accrue large amounts of debt.
Mr. Leeds also alienated many of my original vendors, which further degraded our ability to produce product.Â For example, he failed to negotiate a satisfactory agreement with the designer that I was working with to make high-performance tube electronics.Â As a result, the vendor refused to do business with innersound, which resulted in the loss of the entire line of tube electronics I had been working on for over two years.
Mr. Leeds also decided that he did not want to produce any of my current products.Â So he abandoned all the products that we could have promptly put into production and insisted that all new products be designed and produced before we had anything to sell.
I'm sure you realize that designing and producing an entirely new line of products takes a lot of time and money.Â This was seriously complicated by the fact that he wanted to produce both speakers and electronics at the same time.Â Doing either takes an enormous amount of energy and resources, but trying to do four different speakers, and new amplifiers and preamplifiers all at the same time was overly ambitious to say the least.Â Doing so would have required world-class management.Â Attempting this with Mr. Leeds making all the management decisions was insane.
As if that weren't enough, Mr. Leeds was covertly making arrangements with others to immediately add new products to the line like hard-disk recorders, equalizers, and DACs.Â He was doing this without my knowledge or approval -- and remember that as the company's engineer, I would have had to be deeply involved in the technical details and production issues to bring these new products to market.
As I was the only engineer on staff, Mr. Leeds had no choice but to allow me to do the engineering design work on the Kaya and Kachina speakers (replacements for the Eros and Isis).Â He also had me develop Tehya, a center-channel speaker.Â Prototypes of these were built and shown for the first time at CES, January 2004.Â My original solid state electronics were modified and put in new chassis and also shown at CES 2004.Â Mr. Leeds dramatically raised the prices on all products.
By the end of CES (February 2004), it had been a year since Mr. Leeds had purchased the company, and we still had no products in production.Â By April of 2004, Mr. Leeds realized that a company can't build speakers without a speaker factory, so he finally leased a factory building.
I set up the speaker factory and started building speaker cabinets in June of 2004.Â However, continued conflict over the company's direction, constant product changes, micromanagement, poor decisions, great debt, and the inability to produce product, brought me to the realization that innersound was doomed to failure.Â It had been a year and a half since Mr. Leeds bought out InnerSound, Inc., and we still had no products in production!
Throughout this time, Mr. Leeds deceived the public by advertising products in the print media, through shows, and on the web.Â This was all a facade as at no time did he ever have the advertised products in inventory or even close to production.Â This was an enormously costly activity that added greatly to the company's debt without producing any sales.
The anvil that broke the camel's back occurred on June 30, 2004 when Mr. Leeds informed me that I was no longer a 49% partner.Â He had been financing the company's huge debt (now in the seven-figure range) from his personal fortune and told me that he was converting that debt into shares in the company.Â The resulting dilution of my investment money would reduce my 49% partnership in the company to virtually nothing.Â Seeing that I was being forced out, that there was no future for me with Mr. Leeds, and that the company was failing, I left on July 1, 2004.
It is now five months later and Mr. Leeds has refused to agree to any financial settlement or separation agreement with me.Â So I remain an involuntary investor and partner in innersound, LLC, but I am not involved in the operations of the company.Â Mr. Leeds now has total control of my life's work, but has not compensated me for it.
In summary, Mr. Leeds has taken a functioning company with minimal debt (InnerSound, Inc.) and turned it into a facade (innersound, LLC.) that has been unable to produce product, has accumulated enormous debt, and alienated its customers.

Best,
Roger Sanders

☺ Planar Asylum