Welcome to LRAD Corporation's Fiscal Q1 2012 Conference Call. I'm Robert Putnam, Investor Relations for the company. Kathy McDermott, our Chief Financial Officer; and Tom Brown, our Chairman, CEO and President, are also on today's call. Ms. McDermott will recap our fiscal first quarter 2012 financial results, followed by a brief presentation from Mr. Brown. After his remarks, we will open the call to questions. Before we begin, please note that other than statements as to historical facts, statements made on this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations. Words such as expects, anticipates, intends, believes, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. All of these statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the press release we issued yesterday for a description of factors that could cause actual results to differ materially from those forecast. Any forward-looking statements made on today's call are based on information and management's expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the Risk Factors section of the company's Form 10-K for the fiscal year ended September 30, 2011. LRAD Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated. We'll now turn the call over to Kathy for the fiscal Q1 financial results recap. Kathy?

Thank you, Robert. Good afternoon, everyone, and thanks for joining us today. In our first fiscal quarter of 2012, there were a couple of positive things to note. First, in spite of moderate revenues of $3.6 million in the quarter, we reported net income of $314,000 or $0.01 per diluted share. Operating expenses were held flat, and gross margins improved compared to the first fiscal quarter of 2011. In addition, with continuing uncertainty with the U.S. defense budget, we were pleased to report some orders delivered into other targeted commercial markets. This included a follow-on bird preservation order for an international mining site, a perimeter security order to secure a critical infrastructure for the city of Fort Worth, and follow-on disaster relief order to support the flooding in Thailand. Growth in these other commercial markets will complement our continuing pursuit of global military business, which remains the largest market for the company. Our net revenues for the first fiscal quarter ended December 31, 2011, was $3.6 million, a 64% increase over $2.2 million reported for the same quarter in the prior year. The increase was primarily driven by growth into new commercial markets, as well as the delivery of a U.S. Navy order. Our revenues will continue to fluctuate on a quarter-to-quarter basis based on the nature of our business and customer base. Gross profit for the first quarter was $1.7 million or 48% of net revenues compared to $992,000 or 45% of net revenues for the same quarter in the prior year. The improvement in gross margin was due to the increased revenues and fixed overhead absorption, partially offset by increased amortization of prepaid expenses to support the large foreign government sale in fiscal 2011. Operating expenses for the first fiscal quarter were essentially flat to the prior year first quarter at $1.5 million -- $1.4 million. Net income for the first fiscal quarter was $314,000 or $0.01 per diluted share compared to a net loss of $441,000 or $0.01 per share in the prior year first quarter. On the balance sheet, cash and cash equivalents decreased slightly by $25,000 in fiscal Q1 2012. $2.4 million was provided by the reduction of accounts receivables from the high balance at year end due to strong fourth quarter 2011 revenues, which was offset by a $2.4 million reduction in accrued liabilities, which was primarily for the payment of 2011 bonuses in the first fiscal quarter of 2012. Net inventory increased by $211,000 compared to the prior year end, based on the current sales forecast. Our accounts payable decreased in the first fiscal quarter of 2012 by $444,000 due to higher payables at year end as a result of materials procured in fiscal Q4 2011 to support the higher revenues in that quarter. At December 31, 2011, we had working capital of $19.6 million, which is an increase of $523,000 over September 30, 2011. And with that, I'll turn it back to Robert.

Thank you, Kathy. We'll now turn the call over to Tom for a brief management presentation.

Thank you, Robert. Thank you all for joining our call. As Kathy indicated, we had a positive start to our year. There's no question that 2012 will be a difficult year, but we remain cautiously optimistic as we continue to pursue several international opportunities, while we continue to wait for the U.S. Defense budget to get sorted out. In the first quarter, we released the LRAD 2000X, which has the capability to project clear and intelligible voice and tone over 5 miles of distance. We will be presenting this unit at the Border Security Expo next month. We're also finalizing work on a mass notification system that will project omnidirectional voice and tone. We have received interest for this system from a number of international customers, and we expect to have it ready for sale in our fourth fiscal quarter. We continue to work on enhancing the existing product lineup. We're selling all product categories that's seen strong interest in law enforcement based on the product's performance on the recent Occupy Wall Street protest. We have other products that we are developing, as we continue to expand our business into new markets and new applications in a difficult global marketplace. With that, Robert?

Thank you, Tom.

Go to Q&A.

We'll now open the conference call to questions for management. [Operator Instructions] Operator, please instruct the callers how to queue up with their questions.

[Operator Instructions] Our first question comes from Mr. Rich Abbe from Iroquois Capital.

My question, Tom, really is from the standpoint of shareholder value. You guys are sitting with close to $15 million in cash at a $32 million enterprise value and no debt, profitable. And I'm just wondering at what point do you announce or do something from a stock buyback? Or do you go on -- what's the plan with getting out, going to conferences and starting roadshows and getting the story out there? Because it seems that it's more just been sitting there languishing for the last year or what goes up and comes down or it doesn't trade. Some days, you have trouble even trading a couple thousand shares.

Yes. So, Rich, we are signed up to do the ROTH Conference in March. And we're also signed up to do the B. Riley Conference in May. So we are going to get out on the road. We are going to present our position. And in terms of looking at the stock situation, I think our market capital is around $48 million. And, yes, we're considering a number of different [Audio Gap]. And we're not in a position to announce anything now, but we have been talking about a number of different things that we could do to try to increase the market cap and increase the shareholder position. So we're sensitive to that. We're considering things, but we're not ready to make any announcements at this point.

Our next question comes from Mr. Mike Cikos of the company Sidoti.

Mike Cikos here. Couple of quick questions for you. Regarding the sales, so you will deliver for these projects in Fort Worth, Thailand and international mining site. Is there any chance that sales actually leak over into the second quarter coming off these projects?

No, the ones that delivered in first quarter were primarily delivered for the first quarter. But there are another -- a number of other opportunities that are still underway.

That Thailand order, Mike, if you remember, was a follow-on order from one that we had in the Q4. So I think, Mike, what we're trying to do is build off of these orders. So the perimeter security solution that we provided to the city of Fort Worth is a follow-on order. We did a perimeter security solution in Corpus Christi last year. We're looking to build on this space. So the more opportunities that we have, the more applications that we put on the field and they work well, leads to additional orders. So we're looking for follow-on orders. We're looking to pursue this space because we see it as a good opportunity to get our product out there and in an integrated fashion, and it's performing well. So the feedback that we're getting from the customer is good, so that always helps lead to other market opportunities. You had another question, Mike?

Can you also comment more on the omnidirectional product slated for the end of this year?

Yes, we've been working on a mass communication product. Actually, we have some interest from a couple of international customers looking at different applications for an omnidirectional product, and we've also -- have been talking to some of the wind farms. And the wind farms are looking for more of an omnidirectional device as opposed to a directional device, which the LRAD is. So we've been working on this for a while. We have a prototype that we feel pretty comfortable with. We're getting the prototype out into the field to get in front of a few customers to get their feedback on the product. And if the feedback is positive, then we're going to look to put this out in the marketplace. As I've said, our target is to get it out by the fourth quarter of this year. And it's an impressive device, and the quality of sound is very good. We think it's better than anything that's out in the marketplace today. So we see some opportunities in this space. But this space is actually -- there are a number of number of larger players in this space, but we feel we have a better product than what's currently out there, so we're hoping to build a little bit on market penetration for ourselves.

I see. Who's already -- I guess, the larger players you're referring to, I mean, who already has a product like this out there?

Well, there's -- Whelen has a product. They're a pretty big company up in Massachusetts. Federal Signal, another large company that has a number of different types of alarms and mass communication systems. So these are big companies, and we're getting into a space that's occupied by these bigger companies. But again, we feel our product offering is going to compete on the quality of its performance.

Okay. And just the last thing, I was hoping you guys would be able to give some more color on the initial feedback since you released the 2000 LRAD X (sic) [LRAD 2000X].

Initial feedback is good. We're getting some very positive feedback. We're getting interest. We're getting interest from the U.S. Military, interest from a couple of international customers. We really designed the product for the international space, but we're getting some positive feedback and hope to have some sales in a very short period. So we're going to get it out at the Border Security Expo next month, and that should get some interest. We have -- it can reach out and touch someone at over 5 miles, and it is a very powerful unit. So if you're close to it, it's -- we feel it's the most powerful mobile acoustic hailing device in the market today.

[Operator Instructions] Our next question comes from Mr. Robert Smith [ph].

When you use the term cautiously optimistic, could you give us some color on that? What does that mean in your terms?

Well, right now the entire global marketplace is struggling. And with the budget process in the United States still unclear, as we said last year, our U.S. Military business is down by 40%. And that's a significant customer to us. And as we look at this year, there's still some funding issues on the U.S. Military side. So when I say I'm cautiously optimistic, I'm optimistic from the standpoint that we're growing some new markets and some new geographic markets, mainly international space, that could keep us in a positive position. But we need to get the U.S. Military budget sorted out. We responded to the revised RFI in December of last year. And if that RFI keeps along the process that we hope it goes on, we'll have a very good year. But right now, we're waiting, and we'll see how it develops.

Could you give me some ideas as to how the R&D program functions?

Well, we have several engineers who are developing our product, and we've added 2 software engineers recently. And we are listening to our customer base. As we go out with our business development team, we talk to the customers to try to get some understanding of what their requirements might be, and the customer feedback goes into the engineering team. And then we start to design our products, and we get our prototypes out in front of the same customers and get their input, and then we'll go to market with it if we have positive feedback. So we're more customer-driven than we have been in the past. We're listening to market opportunities that are out there from various customers.

A good example of that, Robert, was like what Tom talked earlier about the omnidirectional LRAD for the bird space. We came out with a directional product, thinking that the RX on a platform would be something that would be perfect for that market. Found out from them through trial that, that, while it worked, wasn't what they were looking for. And this was, kind of, what they wanted, something that could encompass an entire wind farm in any direction the birds would come, and then after that, activate a unit that would pan and tilt and focus. So this is the kind of thing that goes into the R&D effort, finding out what our customers want, what the market wants, and then driving our R&D efforts accordingly.

And what would you say are the largest market opportunities away from the more traditional ones?

Well, still the largest market opportunities that are facing us on a short- and mid-term basis is with the military: U.S. Military and international military. That's still our largest opportunity. And we're trying to expand into this bird mitigation, preservation -- actually, wildlife preservation. And we're seeing some good success in that space. The product performs well. It's been very successful in every application that we've had. So we see that as a longer-term opportunity. But right now, we are really focused on trying to develop the military market further because that is the biggest market space for this product.

Is anything happening with the border question?

Well, we're going to be at the Border Security Expo next month in Phoenix, Arizona. And we've done a number of border shows. There's money that's going to be spent this year by the Department of Homeland Security for border protection, and we're trying to get their interest in our product because we feel we have a very good product for that application. And this new LRAD 2000X that can reach out over 5 miles would be perfect to set up on the border. So we're going to present that at the show. We're talking to people inside Homeland Security, trying to get some interest up, because we feel that this is a perfect product for that application.

And how about connections with local police and law enforcement?

That business is doing very well. Unfortunately, it's a smaller business because the local police forces buy smaller quantities. And they're more or less buying more of the handheld units, the 100X. But we are expanding that business very well. That's been good business for us. And with the start -- at the G20 in Pittsburgh, that was the first big media splash that we received for the application of the product at that protest, I'll call it. And Occupy Wall Street, we've got some very good publicity at Occupy Wall Street, as used by the New York Police Department, used by the Oklahoma Police Department and a couple other police departments. And that has led to some additional acquisitions of the product. So law enforcement business, while it's more the ones and twos type of business, it's been very good for us, and it's growing.

You suspect that you'll be in evidence at the conventions this year?

We're working them. We are working them. And we'll see. But we think we're moving in both areas, and we feel we've got some business out of both of those conventions.

[Operator Instructions] Our next question comes from Ms. Justin Fridericks. [ph]

Justin Friderick. [ph] I was just wondering now that the Defense budget has passed, what are your contacts telling you about the flow of fund from the different military branches towards products like LRAD?

Well, right now, the flow of funds is not so great. And I think that there's still a lot of -- there's still a lot of uncertainty around the funding. We do have interest at the field level. We are -- we're out -- I have a business development guy in Fort Bragg this week, and we're talking to all the military. And there are -- there is interest out in the field. However, when it rises up, the funding is being held back because of various reasons. I think when you get to the government, in a lot of cases, money gets spent in the third and fourth quarter. And that's been our experience for the last couple of years. So right now, funding isn't moving too rapidly from what we can see. And 2013 budget is still being kicked around. It was supposed to be -- there was going to be some definition on that budget released last month. Now they're talking about the 13th of February, some information coming out. So we're talking to all of our contacts. We're working this very hard, but we're still at the mercy of the government, which is -- can be frustrating at times.

And so, and as far as that KONGSBERG opportunity, that's in the same situation. KONGSBERG is waiting for the same feedback that you're waiting for?

Same situation. Yes. I think if you look at all the defense contractors, we're all in that same boat. Anybody doing business with the military is sitting back and -- a lot of projects are on hold right now until things get sorted out.

[Operator Instructions] Okay, sir, there appears to be no more questions in the queue.

We've got -- before we go, we've got one that came in on the e-mail asking about offshore oil platform opportunities. Are they looking towards the RX or are they looking more at omnidirectional products?

Well, we did fulfill an order at the end of last year that was shipped into an offshore oil platform off the coast -- in the Middle East, off that. I don't want to be that specific. But we sent 4 RXs initially, and we anticipate some additional add-on orders once they get installed with installation that gets integrated with a number of different sensors. So that installation is still in process, and it should be completed within the next month or so. And then, hopefully, we'll see some add-on business from that. We also just received an inquiry about the LRAD 2000X for an oil platform, and we hope to see that come in the way of a purchase order very soon. But it's more the RX or the 2000X that will probably be put on an oil platform. The omnidirectional is more likely to be deployed in mass notification, base defense systems. And also we're hoping to get some wind farm applications. But it's more of the RX and more of the 2000X for the oil platforms.

Thank you for listening to and participating in LRAD Corporation's fiscal Q1 2012 conference Call. A replay of this webcast will be available in approximately 24 hours through the same link issued in our February 1 press release.

Thank you. This concludes today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have great day.