[Call Starts Abruptly] At this time, it is my pleasure to turn the floor over to your host Brian Harvey, the Director of Investor Relations and Capital Markets. Sir, the floor is yours.

Thank you, Mike. Good afternoon and welcome to LRAD Corporation’s Fiscal Third Quarter 2016 Financial Results Conference Call. I’m Brian Harvey, Director of Investor Relations for LRAD. On the call with me this afternoon are Kathy McDermott, LRAD’s Chief Financial Officer; and LRAD’s new Chief Executive Officer, Richard Danforth. In just a moment, Mrs. McDermott will recap our fiscal third quarter financial results, and provide a brief update on our business. Afterwards, we will open the call to questions. But before I turn the call over to Kathy, I would like to take this opportunity to remind you that during the course of this call, management will make forward-looking statements. Other than statements as to historical facts, statements made during this call that are forward-looking statements are based on our current expectations. During this call, we may discuss the company’s plans, expectations, outlook or forecasts for future performance. These forward-looking statements are subject to risks and uncertainties and actual results could differ materially from the views expressed today. For more information regarding the potential risks and uncertainties, please see the Risk Factors section of the company’s Form 10-K for the fiscal year-ended September 30, 2015. LRAD Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated. And I’d now like to take this opportunity to introduce Richard Danforth. We at LRAD are very excited to have Richard on Board, with over 30 years of defense and aerospace industry experience, and some of the world’s leading defense contractors, we look forward to Richard bringing his extensive knowledge of strategy, global market, operations, and execution ability to LRAD. With that, I’ll turn the call over to Kathy. So she can provide some color on our fiscal third quarter results and review some of our business opportunities. Kathy?

Thanks, Brian, and thanks, everyone, for joining us today. LRAD Corporation revenues were stronger in the fiscal third quarter compared to the first two quarters of this fiscal year. Our revenues for the quarter were $5 million, a 44% increase over $3.5 million reported in the fiscal third quarter of 2015. This growth was primarily due to two large orders. The first is a $1.1 million public safety order in Southeast Asia. This is the fourth and largest public safety order delivered to this country over three years. The second is a $760,000 order for Navy vessels into Southeast Asia. We shipped the first portion of this order in Q4 2014 for the initial ship built and this was the balance of new vessels have now been built and commissioned. We also shipped three orders totaling 939,000 into one Asian country, for port security, coastguard, and an offshore platform project. Year-to-date, revenues were $11.5 million, 7.4% decrease from the $12.4 million reported in the prior year-to-date. In addition to the shipments, I already mentioned, we have strong revenue into a variety of applications, including global, public safety, prisons, order and primitive security, energy companies, mass notification, oil and gas, and U.S. and foreign military and military vehicles. Of course, we’ll continue to be uneven due to the timing of approvals or budget. Gross profit for the quarter-ended June 30, 2016 was $2.4 million, or 48.4% of net revenues, compared to $1.7 million, or 48.5% of net revenues for the third quarter of the prior year. The increase was primarily due to increased revenues and fixed overhead absorption. Gross profit for the nine months ended June 30, 2016 was $5.4 million, or 46.8% of net revenues, compared to $6.4 million, or 51.4% of net revenues for the same period in the…

Thank you, Kathy. We will now open the conference call to questions. We encourage callers with questions to queue up with the operator as soon as possible, so that there will be minimal lag time between each caller. Mike, could you please instruct the callers how to queue up with their questions.

Sure. The floor is now open for questions. [Operator Instructions] And our first question comes from Bill Church. Please state your question.

Yes, thank you for taking the call. Question, do – we received orders or do we have the capability to preposition our units on city streets that could then be remotely operated?

Absolutely. Mass notification is one of the diverse application for – would be for communications within cities or towns to be able to communicate, alerts, storm, warnings, Tsunami warnings in coastal villages, tornado warnings in that area. So that would be a great application mounting it on poles, mounting it on buildings, and the networking that been able to communicate to the devices from one central location.

And that’s actually an area, Bill, we’ve had some success with in Japan, where we have rolled out the several towns and cities in that case. So we are hoping to bring that domestically as well, but it is the used case that we’re aggressively pursuing.

Okay. And that would be for mass notification, can it also be used probably technically more difficult, but in case of say, demonstrations, or riots, or that sort of thing to try to pinpoint targets?

Well, it would be hard to know where to put them in advance of an event like that. But I suppose, we could – we do offer remotely-controlled the core LRAD business to directional sound unit. So that is something we could do. I think it would be difficult though to anticipate where they might be needed, which is why the mass notification product could work for that as well.

Okay. And then the final, just follow-up on this last week, maybe some of the other New Yorkers have seen it, but that was Fifth Avenue by Rockefeller Center. And I saw a little gizmos coming off street – lamps or street poles that were not cameras, I have no idea what they were, and personally I was lifted, we were trying to speculate what they were, and I was thinking how that would be cool for your kind of application also to be there. Okay that’s it.

Absolutely.

Okay. Thank you.

Great. Thanks.

Thank you.

And our next question comes from a Amiel Traynum. Please state your question.

Hi, it’s Amiel Traynum from Millennium Asset Management. Can you go over the backlog orders, again? I [indiscernible] but if you could elaborate on the backlog of orders?

So we don’t typically report the backlog on quarters, we’ll report that again at year-end. And the reason for that is just because it’s difficult to anticipate when those will shift, especially as we get closer to the end of the year, so backlog doesn’t necessarily imply that or get out this next quarter. Our backlog do remain healthy though, we do have quite a bit in backlog. It’s not – like a good example is that 750,000 order we shipped this quarter that was originally booked back in 2014 that, because of the delay in building ships, it takes a while to get out. So because of that we typically don’t provide backlog.

And one additional question, has there been any discussions with your activists regarding the cutting of the dividends, is there any concern there?

We have not discussed that. I believe the Board may have, but the Board actually is – had that in communication with them. So I don’t think that there will be any issues with that.

Okay. Thank you very much.

Thank you.

Thank you, Amiel.

[Operator Instructions] Okay, and our next question comes from Steve Wagner. Please state your question.

Yes. Good afternoon, gentlemen. Congratulations by the way everybody on a great quarter. I don’t think a lot of people were expecting that honestly a good work.

Thanks, Steve.

That’s really good stuff, and welcome aboard Mr. Danforth, I hope I’m pronouncing your name properly.

You did. Thank you very much, Steve.

Okay. I mean, we are all curious, are you going to put out some kind of like a – when you had an opportunity to get the nestled in, are you going to put together some kind of vision statement, some thoughts that you can convey to shareholders with regard to leadership and motivation and where you see your tenure taking LRAD, do you have any comments that you can make right now in that regard?

Well, I’m in day two, so it’s a little preliminary but…

Well, true, true.

What I’m saying is that wait…

Go ahead.

Wait one more day.

My expectation would be to conduct a thorough review, both operationally and more importantly strategically and do the best we can to make the most that we can from this company. It’s a great company with great people and great products, so it’s going to take a little bit of time now.

Okay, fair enough. Could I ask a question, what was the one thing that attracted you the most to coming on Board as CEO?

There wasn’t one thing. I was – an overall look at the company, the product, the people, its position, and perhaps, most importantly, its potential, and that’s what attracted me.

All right. Indeed, well, we wish you the best and we look forward to – I do have one concern, I think, I’m speaking on behalf of a lot of shareholders out there, maybe a little bit disappointed, I don’t think it’s a massive thing, but maybe a little disappointment in the suspension of the dividend just for me touch – high touch standpoint it’s not tremendously expensive. And yet it’s still a nice solid show support for shareholders. I recognize that we want to give you Mr. Danforth time to review things. But I think a lot of shareholders may – will be disappointed with that decision on the behalf of the Board. But certainly, some of the comments, the forward-looking statements were positive and we look forward to hopefully taking advantage of what seems to be a world made for LRAD products, okay?

Our next question comes from Dan Morris. Please state your question.

Yes, kind of a follow-on to the first question. You guys have a trailer mounted system as well, and I was curious, is there any activity in that area?

Yes, we do have a trailer. We haven’t sold many others to-date. We do have some quartiles one that that looks very promising. They’re beneficial to our customers primarily, because they are mobile. They can move them around into different areas as needed. So it – I believe it will be a popular product as we move forward. I don’t know the water sell thousands of them, but it definitely has its niche. And again, we do have a large quartile for them. So we’re looking forward to closing some of those.

Okay. Thank you very much.

Thank you.

Thank you.

Our next question comes from Robert. Please state your question.

Could you share with me what your experience is with both onshore and offshore wind turbines?

So we have a – well it’s a good application. There hasn’t been – there’s been no penalties right now for chopping up birds unfortunately with wind turbine. So we haven’t today. It had much success and placing them on products. We continue to work with the application, but there hasn’t been really strong response today.

What would be the cost to the unit on six megawatt turbine, approximate…?

Yes, we depend on size of the unit. If we just put a small unit up there, maybe like $15,000 to $20,000 unit.

When you say a small unit, so how effective would – what are the parameters through such units would be?

It should keep them out of the path of the wind turbine, enough to – give enough distance that we route them out side of the wind turbines.

All right, thank you. Because some aware of that situation, there might be applicable. Thanks.

Welcome.

Our next question comes from Lloyd Korten.

Hi.

Yes, hi. Hold on one second. I’ll get out the speaker. Hi, well, congratulations. I’m glad we had a positive quarter. I’ve missed that Airport welcome. I think you’ve joining a great company with great product.

Thank you.

Yes, I read quickly a profile that they sent through and I think – I see that you have vast military experience out there. What I am assuming quite a bit of contacts in your military expertise. Do you – when you decided to come on Board, I mean do you feel strongly that you can increase our business with military being domestic and international?

I think the market potential for the company through the USDOT and others that certainly there. And as I said, from my view of things, the potential for the company and the upside there is – specifics of which, of course, is way too soon to tell.

Right, we have two award winning products that will be LRAD and Mass Notification. Wherever on the New York or wherever I go here or kind of any city today, we have cameras everywhere to see, what’s going on. And hope the concept of being able to see and communicate they’re really go hand-in-hand, but not only what it will take or if your expertise is in that area with municipalities, then how do we get them to clearly importance of being able to communicate with clouds or if there is a disaster, that they can one people, et cetera. Do you have any – have you given thoughts yet?

Again Lloyd, I’ll tell you that the potential is obvious. As you just pointed out, someone said earlier that the world events seem to be positioned to use the products of LRAD, quite expensively and as I said over time we will put together the necessary planning and what we can do to go address those markets.

Thank you. Brian, maybe you can answer this. Can you give us a little update from the quarter about China? I know that last time we spoke, anything they put one on – one of their ships et cetera. Is there anything…?

I’ll defer that to Kathy. Kathy has some more color on dollars and opportunities in China.

Thank you.

The China is – In China, sales were actually down this year compared to last year. We had several as you recall, we had like a continuation of quarters that we’ve been shipping out every few quarters, and those have now slowed. So we’re still working on other opportunities with Coast Guard and with police and army over there. So we’re continuing to pursue that to our partners. And there is a lot of things on the horizon. So we expect that to continue strong.

And then we originally be partnered with a government controlled company, is that correct?

That’s right. It’s not government control, but they do have relationships with the government, and as we indicated the manufacturing capability in China, which is helpful for doing business with the government.

I’m probably disappointed, I don’t have all the reasons why, but I anticipate that – being our products are so special then we would have more growth with them. Is there any reason why I mean we have the wrong partners there?

Well, I think we’ve got a good partner. They seem to have made a good investment in us and they seem to know the products and marketing the product. They’ve got a wonderful chill room over there to display our product. I think they deal a little bit with knockoff, which probably hurts us to some extent. But we have the better product compared to the knockoffs over there. But I think they just probably – just a little bit more time to keep working that market and I’m now working several markets and there are a lot of opportunities out there. They’re sitting around, just a matter again of with budget cycles in closing the opportunity. So we’re still optimistic on China.

Correct that we put on the world on one of their shifts?

I don’t recall…

Actually I do believe and then actually there was an article in a – I believe it was a tie paper about a Chinese, Coast Guard Vessel harassing type fishermen in international waters and it was – you can actually hear the LRAD, LRAD in the background. It was – it’s also on YouTube. So I believe we are on in the several or at least that one Chinese ship and I think the again you can find the article online or if Lloyd, if you remind me, I can try to find it for you.

Yes, [indiscernible] discussed on a previous call, I think and I said at the time, much rather be speaking to each other and you’re firing bullets at each other and it’s a great ways for ships to communicate.

Right and I think exactly what the Chinese were using it for. They were claiming that the Thai fishermen were in their territorial waters. And so they communicated in and dropped the warning tone. And so – and again it was all captured on video, because everything in the world is captured on video now. And so it is on YouTube, and again, if you remind me, I can get you that. From the Thai perspective, the Chinese government didn’t obviously put out anything about it.

Right is there any new information on the automobile end of our business, protecting because we had any growth there or new business?

Both of that business set then with the State Department and that does continue with orders to not pay for overseas embassies and overseas vehicles. So we have had some pretty good business through that.

You considered it now a steady business?

I don’t think anything in our industry, market was steady. But there have been repeated orders, which I guess as close as we get to steady. We are looking at other opportunities to get that out into other markets as well. But that’s been the primary source of fund.

Okay. Thank you for your time and best of luck and the success just going forward. And thank you for joining our company.

Well, thank you.

Thanks, Lloyd.

[Operator Instructions] And there appear to be no further question, back to you Brian.

Great. Thank you, Mike. And thank you everyone for participating in LRAD Corporation’s fiscal third quarter 2016 conference call. A replay will be available approximately four hours from now through the same link issued in our July 21 press release. Thank you. Everyone have a good afternoon.

Thank you. This does conclude today’s call. We thank you for your participation. You may disconnect your lines at this time and have a great day.