Brian Harvey - Director of Investor Relations Richard Danforth - Chief Executive Officer Kathy McDermott - Chief Financial Officer

Good day ladies and gentlemen and welcome to LRAD Corporation's Fiscal Third Quarter Financial Results Conference Call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your host, Brian Harvey. Sir, the floor is yours.

Thank you, Mike. Good afternoon everyone and welcome to LRAD Corporation's fiscal third quarter 2017 financial results conference call. I'm Brian Harvey, Director of Investor Relations and Capital Markets for LRAD. And on the call with me this afternoon are Kathy McDermott, LRAD's Chief Financial Officer; Dennis Klahn, Interim Chief Financial Officer and LRAD's CEO, Richard Danforth. In just a moment, Mrs. McDermott will open today's call with a recap of our fiscal third quarter 2017 financial results. Mr. Danforth will then provide an update on our business and afterward, 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 forecast 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 potential risks and uncertainties, please refer to the Risk Factors section of the Company's Form 10-K for the fiscal year-ended September 30, 2016. LRAD Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated. I would now like to turn the call over to LRAD CFO, Kathy McDermott. Kathy?

Thanks, Brian and thanks everyone for joining us today. As we previously announced, I'll be leaving LRAD after over ten years with the Company to pursue other interests. I fairly enjoyed my time here and the experienced I've gained as well as all the wonderful people I've had the privilege to work with over the years. On the call with me, as Brian had introduced, is Dennis Klahn, who has been hired as an Interim CFO, who has a strong financial background and public company experience and will be picking up where I left off. Looking at the quarter ended June 30, 2017, our revenues were 4.1 million, 18% decrease compared to the third quarter of fiscal 2016. During the quarter, we shipped 1.9 million public safety order to Southeast Asia, we also shipped 525,000 order for replacement units on Navy Ships. Our quarterly revenues continue to be uneven due to the timing of funding and approval process in government agencies in the US and internationally. In addition, as we increase our mass notification business, some of those projects tend to have longer delivery cycles as they often involve infrastructure installation and software integration. However, we continue to be encouraged by the overall increase of orders and the growth of our year-to-date revenues by 12% from the 11.5 million for 2016 to 12.8 million for 2017. On a year-to-date basis, revenues into our mass certification markets have been strong, increasing by 1.9 million or 160% over year-to-date 2016. We've had some good wins with colleges, the US ports and in international oil and gas application for our mobile mass notification units that is showing that we can be competitive and successful in this market. Global law enforcement and public safety orders also remain strong and continue to grow. Gross profit…

Thank you, Kathy. I'll now turn the call over to LRAD's CEO, Richard Danforth, so he can provide additional color on LRAD's business. Richard?

Good afternoon and thank you for joining the call. Before beginning my business remarks, I want to again thank Kathy for her excellent work, dedication and financial diligence over the past 10 years that has positioned LRAD for success. On behalf of the Board and everyone at LRAD, we wish Kathy success in her new opportunities and future endeavors. Fiscal third quarter revenues were $4.1 million, lower than what you may have anticipated due to the strong year-to-date and third quarter bookings, but reflective of a longer build cycle for our mass notification products and systems. This is also reflective of our fiscal third quarter ending backlog of $6.5 million announced earlier today. At the end of July, our backlog has grown to $9.2 million with additional orders expected throughout the fourth quarter. When compared to the same period last year, third quarter's $6.4 million in total bookings were 200% higher and year-to-date bookings are up 48%. Third quarter mass notification bookings totaled over $2 million, 6 times higher than the same period a year ago and 2.6 times higher on a year-to-date basis. The mass notification bookings included the recently announced LRAD 360X and 360XL-MID installations on the campuses of George Mason University in Virginia and two other universities. Mobile and permanent LRAD ONE VOICE system orders were also booked for the U.S. military base in Afghanistan, the city of San Jose, California and a satellite activated system for a dam and hydroelectric facility here in California. Total bookings year-to-date at the end of June were $15.9 million, up 48% over the same period last year and 10% more than all of fiscal year 2016. We expect our strong fiscal fourth quarter bookings trend to continue. For the first nine months of fiscal 2017 revenues increased in all of…

Thank you, Richard. 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, would you please instruct the callers on how to queue up with their questions?

Sure. Thank you. The floor is now open for questions. [Operator Instructions]

And Mike while the queue builds, we did receive an email with several questions that we'll answer while the queue is building. The first is if Richard could provide any progress on any LRAD Army business that is coming this year?

Sure. Ripple as my remark - in my remarks I stated that FY '17 bill was passed in May. We expect an order from the U.S. Army this quarter that we're in. There's no reason to not to expect to get that.

Okay. And could you provide an update on the Army RFP that we've been anticipating?

Yes, the multi-year RFP is for 2018 through 2022. It of course is subject to an FY '18 defense budget. House has submitted, Hacky has submitted their budget and the line item for acoustic hailing devices is in there. The Senate has not submitted yet, so we believe it'll be in there. In terms of the - so that's in the budgeting process. In terms of the RFP, that looks like now it will come out towards the end of this year as we've mentioned before we'll be competitive but we're in a very good position to win.

Okay. Thank you. We also received a question about Kongsberg for the CROWS' escalation of force, if we could provide an update on that.

Sure. As you know there's over 11,000 CROWS systems fielded between 2003 and 2015. The FY '17 funding for CROWS was in total of $4 million that was Army RDT&E. The expected notional time frame for a program is FY '19 and '20.

Okay. And finally if there were any border opportunities, an update on the wall for LRAD?

Well, there is no wall to get. DHS did put out a RFP that had over 200 respondents for proposed walls. There were 20 companies selected for those proposals, three of those have LRAD products embedded in them, two of those companies have already bought products for demonstrations for their wall applications, so more to follow but a long way to go.

Okay. With that operator, could you please go to the live queue.

There appear to be no questions at this time.

Okay. Why don't we wait just a minute if there are any, anyone has questions we'll take them otherwise we'll wrap it up.

Okay. [Operator Instructions] And we do have a question from David. Please state your question.

This is Dave Luke [ph]. Richard, when you first came on board the dividend for shareholders were eliminated and not long after the stock buyback program was I believe discontinued for all practical purposes and I was told that the Board wanted to give you the opportunity to allocate our cash resources. It's been a year now, any - is that true, is that why those were eliminated and any thoughts on the future for the one asset that really is worthwhile in this company.

Yes, it is true, Dave. The use of that capital was stopped for the dividend of the buyback as you mentioned. We are looking and have - this team and I have been looking for ways to add to value to LRAD, whether it becomes through acquisition or through new product development and all of those things are still very active.

Okay, I guess that's the answer. The cash is better on the balance sheet waiting for a possible acquisition. Okay. Thank you.

That's correct. Thank you, David.

And there appear to be no further questions.

Okay well thank you everyone for participating in our fiscal third quarter 2017 conference call. A replay will be available in about four hours through the same link issued in our July 26 press release. Thank you very much.

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