Good day, ladies and gentlemen, and welcome to the Fiscal Third Quarter 2019 Financial Results Call. All lines have been placed in a listen-only mode and the floor will be opened for questions following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the floor over to LRAD's CFO, Dennis Klahn. Sir, the floor is yours.

Thank you, Jim. Good afternoon everyone, and welcome to LRAD Corporation’s fiscal third quarter 2019 financial results conference call. I am Dennis Klahn, Chief Financial Officer for LRAD. On the call with me this afternoon is LRAD’s Chief Executive Officer, Richard Danforth. In just a moment, I will open today’s call with a recap of our fiscal third quarter 2019 financial results. Mr. Danforth will then provide an update on the business. Afterwards, we will open the call to questions. Before we begin, 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 of 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, 2018. LRAD Corporations disclaims any intent or obligation to update those forward looking statements, except as otherwise specifically stated. We may also discuss non-GAAP operational metrics of bookings and backlog, which we believe provides helpful information to investors with respect to evaluating the Company's performance. We consider bookings in backlogs leading indicators of future revenues and use these metrics to support production planning. Bookings is an internal operational metric that measures the total dollar value of customer purchase orders executed in a given period, regardless of the timing of a related revenue recognition. Backlog is a measure of purchase orders received that have not been shipped. LRAD's third fiscal 2019 revenue of $8.9 million was a record for any third quarter in our history. Q3 revenue represented an 18% increase of the $7.5 million generated in the third quarter fiscal 2018. Gross profit for the third quarter of fiscal 2019 was $4.6 million, or 52% of revenues. This compares with $3.7 million or 49% of revenues for the third quarter as the prior fiscal year. Operating expenses in Q3 were $3.9 million, an increase of $39,000 or 1% over the third fiscal quarter of 2018. The slight increase versus the same quarter last year was primarily due to higher R&D expenditures for increased investment in the development of software products, which is partially offset by low expenses in several selling & general administrative categories in this year's quarter. Pretax income in the quarter was 750 [audio gap] and 10,000 compared to a pretax loss of 154,000 in the prior year period. LRAD generated $638,000 of net income or $0.02 per diluted share in the third quarter of fiscal 2019 compared with a net loss of $80,000 or a loss of breakeven per share in the same quarter a year ago. In this third quarter this fiscal 2019 cash provided by operations was $3.3 million compared with a $754,000 use of cash in Q3 of 2018. For the nine-month period ending with Q3 fiscal 2019 cash provided by operations was $2.4 million compared to $2.2 million provided by operations in a similar period in fiscal 2018. The balance sheet remains strong. Working capital at June 30, 2019 was $23.9 million, an increase of 2.8 million compared to September 30, 2018. Cash and cash equivalent for June 30, 2019 were $11.3 million compared with $11.1 million at September 30 2018. With that, I would like to turn the call over to Richard.

Thank you, Dennis, and good afternoon to everybody on the call. We continued our strong fiscal 2019 performance with record revenues for the Company's fiscal third quarter and first nine months. Fiscal first nine months' revenue of 29.2 million surpasses all previous full fiscal year revenue results. When comparing the first three quarters of fiscal 2019 was the same period last year, revenues have increased 27%. Gross profit was 14.9 million, up 27%, operating income was 3.4 million, an increase of 141%. Net income was 2.9 million or $0.09 per diluted share an increase of 320%. Backlog at the end of June was 10.4 million, an increase of 10%. Defense, public safety, and law enforcement sales was strong in the first nine months. Revenues from our America regions increased 57% to 23.4 million. Public safety revenues for the period were 6.6 million, up 12%. Fiscal first nine months' bookings were 20.9 million, an increase of 1.4 million from the same period a year ago. With the large army order announced last week and others orders received to date this quarter, the Company has achieved a new high in fiscal year bookings. Regarding the 4.7 million and delayed fiscal 2018 shipments to two countries in Southeast Asia we've discussed on previous calls, all but 11 of the AHD systems built for these orders have been sold to other customers. The government funding issues and political instability that delayed the orders are resolving, performance on the delayed orders as well as the receipt of new orders from these two countries are expected in early fiscal 2020. In the third quarter, we continued with work with a FEMA funded public safety system in Puerto Rico. This relationship provided us with an opportunity to team with FEMA on a unique alerting system webinar. The webinar gave emergency management officials an online demonstration of a solar powered satellite connected LRAD 360XT Mobile system, receiving and broadcasting a test message from FEMA's integrated public alert and learning system IPAS. FEMA utilizes IPAS, the nation's alert and warning infrastructure to quickly provide the public with critical information. The Company won a FEMA funded competitive award last year to provide LRAD systems that will deliver time critical, emergency warnings and life safety instructions to Puerto Rico's residents, and speed future disaster response to the island. Further FEMA funded business opportunities are anticipated. Last month, we announced the hiring of Paul Neyman to the newly created position of Vice President of Software Sales here in the U.S. We view our SaaS business as a key element in driving our long-term revenue and margin experience. During Paul's recent role as Director of North and Latin American sales for Blackberry AtHoc's Crisis Communication market. His team consistently delivered year-over-year bookings and revenue growth. Paul is taking an active role in the development of our SaaS business and building high margins recurring revenue streams. Our SaaS solutions are capturing interest of domestic and international governments and emergency management officials. The Company currently has several SaaS only proposals pending in the U.S. and two other countries. The proposals include city, regional and national installations. We are also responding to a directive issued by the European Union last year that mandates all 31 economic zone countries established emergency warning alert systems to protect citizens and travelers by June 2020. With the assistance of our Genesis staff in Madrid, we will pursue these EU country opportunities. The Company is well-positioned to compete for the EU alert directive and the global unified critical communication market, a market that is expected to grow to more than $14.5 billion by the end of calendar year 2020. Here in California, catastrophic wildfires and flooding devastated many communities over the last two years. These tragic events confirm the absolute necessity of having emergency warning systems that continue to operate when existing power and communication infrastructure fails. The public safety demonstrations we've conducted at the request of fire officials and emergency managers have resulted in LRAD installations including Genesis software in Southern and Northern California. In addition to LRAD installations in the cities of Laguna Beach and Mill Valley, we are working on several other public safety and emergency warning opportunities in the state. We expect new orders from cities near wild-land urban interface areas in our next fiscal year. The recently announced $14.8 million order for the U.S. Army's $110 million AHD program further validates the army's continued commitment to supply soldiers with the industries best critical communication and scalable escalation of force equipments. This initial LRAD 450XL system order and the previously delivered LRAD 500X orders represent approximately 30% of the total army AHD program requirement. We expect a second LRAD 450XL order under the program this quarter and increased sales to the army and other branches of the U.S. military in subsequent fiscal years. We also anticipate international defense, homeland security and public safety sales to improve and accelerate in fiscal 2020. Record third quarter and year-to-date sales generated more than $7.5 million in cash from operations in the last two quarters. Robust bookings and backlog have us on track for an increase in fiscal fourth quarter revenues over the same period a year ago ending the fiscal year with record annual revenue. Growing in public safety, emergency morning mass notifications in defense orders are expected to drive further increases in bookings and backlog positioning the Company for continued revenue growth through fiscal year 2020 and beyond. With that, I will turn it back to Jim.

Thank you. The floor is now open for question. [Operator instructions] Our first question comes from Aman Gulani from B. Riley. Please take your question.

So I guess my first question is about Genesis. How much revenue did you generate from Genesis in the quarter? And then are you starting to see domestic revenue from Genesis now that you should have talking to the Southern Californian cities that are looking to implement that?

The two programs I mentioned at Mill Valley and Laguna Beach are all, both outfitted with Genesis as the platform software for the systems as well as Puerto Rico. So, yes, we are seeing more in the U.S. In terms of outside the U.S., Dennis may have the specific number, but they're on track to do about $2.25 million to $2.5 million in sales this year.

Got it? And then from domestically, what would you see that number as?

Well, as I said, they're embedded in those three systems that we didn't actually break it out. In my remarks, Aman, I mentioned that we are pursuing opportunities for software only SaaS solutions here in the United States. There are a number of proposals that we are working on one of which is at a point where we expect an award announcement probably here in early September. Whether we win or not, I don't know, but -- so that pipeline is filling up.

Okay, thanks. That's helpful. And then I just want to confirm the Asia Pacific customer that got pushed out. Do you expect that to come back in early calendar2020?

Yes, these two countries, Aman, both one was a presidential election one was a review of all programs in the country. Our folks have then there to both countries as recently as two weeks ago, not only those orders that were delayed, have they reassured that they want them and will pay for them, but there's programs at both countries that would represent larger orders in our FY '20. So, I think we're -- it's better than it's been.

Got it. Okay. Yes, that's good to hear. And then last question from me. I know from M&A perspective, are you seeing anything interesting out there that you might be looking to acquire, right now?

We're always looking.

Okay. That's all I'll pass it on.

Thanks.

Thank you. Our next question comes from Alex Silverman from AWM. Please state your question.

So, you guys announced Mill Valley was about a $0.5 million dollar contract, but I don't believe you press released Laguna. Can you give us a sense of how big that was?

Guessing, Alex, it was less than the 500 K. I don't remember. I will say there's more to follow with on Laguna Beach.

And then just a follow-up on the last question, the $4.7 million, am I correct that none of it shipped in the third quarter?

Correct.

And do you expect any of it to ship in Q4?

I'm not anticipating it. We were burned last Q4, Alex, and I'm not going to let that happen to us twice.

And then my last question. $10.4 million of bookings where did backlog stand at the end of the quarter?

That was the backlog number 10.4

Was the backlog? Your press release lists 10.4 as bookings. Do I have that wrong?

No, just happens to be the same number.

Okay, got it. That's very helpful. Thank you.

Okay.

Our next question comes from Ed Woo from Ascendiant Capital. Please state your question. I'm sorry.

No, no. That's -- here I said, [Elrad]

Okay. I'm so sorry. [Operator Instructions] Our next question comes from Scott Billeadeau with Walrus Partners. Please state your question.

I'm wondering, as you're competing in with Genesis and being able to respond. Can you talk a little bit about what the competitive universe looks like now? Are you competing with some bigger guys? What any changes and you have strategy changes to take to address that? Can we just a little update on what you've seen in the competitive front? Thanks.

Sure. In the United States, there's two large providers of similar services that have been, one's a private equity owned company that was a roll up several…

Hello.

Every day. In Europe, not so much, there's a small player in Oslo that was bought by one of the larger players here in the United States, Everbridge about a year and a half ago. So, we're seeing more of UMS in Europe and outside of Europe than we have in the past. In the Asia Pacific region, not too much and that's about it.

Our next question comes from Bruce -- sorry, if I mispronounced this, [Genedis]. Please state your question.

Yes Jannigan. Two questions may I speak now?

Yes.

Yes. Well, the first relates to the $4.75 million maintenance agreement in India with the Indian Navy. Are there are other maintenance center contracts? Where are they? What's the revenue involved? Is more anticipated?

Specific to India, yes, it's 4.75 million for five years. In your note, you've mentioned it came to you as a surprise. We would have been under seven-year contracted to provide that same service that expired. So, this five-year was an extension of what we've been doing for the prior seven years. There's approximately six separate locations in the country of India where spare parts and repair people are available to keep the product in the navy up and running. So this is going to last another five years. We do not have to the best of my knowledge, another maintenance contract anywhere near that size, Bruce.

And then you were mentioning licensing and maintenance fees. Are those going along with the Genesis system going along with your hardware?

Genesis.

And are those fees substantial? Have you given any indication of those?

They're software licensing fees and maintenance fees. So, it's -- generally, the hardware is going to be a bigger piece initially, but the recurring revenue from the software continues forever.

And the total genesis revenue as we mentioned little bit earlier with anywhere from $2 million to $2.4 million on an annualized basis, so that is all software license ongoing annual support and installation costs.

Thank you. Our next question comes from Lloyd Korten from Unique Investment.

When you came on you're starting to see some sustained quarter over quarter year-over-year growth and really appreciate your efforts and most everything was covered. There was an article just today I think it was in Wired about the problems of potential hacking into public speaker systems and turning them up to deafening sounds. Are you familiar with that article?

I’m not, but I will look it up after this call.

So, my question is, under those circumstances, our law systems have any protection against that.

They do, Lloyd. So, it's -- we have more than one method of securing that as you know the Genesis-based systems are cloud-based and covered with all of the requisite security protocols, and the older LRAD systems generally networked on a private network, which will provide some protection as well.

Thank you. Also the U.S. Navy which is always a wonderful calling card anywhere in the world for your product. Are there like older systems that were put on years ago that will be replaced or are being replaced?

Yes, right now, it's more ad hoc so the ships will contact us directly. We are working with the Navy Yard in Washington to establish a program to systematically replace without that.

I mean our current hardware is it significantly different than five years ago, or seven years ago.

Substantially different, yes, it's smaller, lighter and more powerful now.

So, tell the navy I want complete free hauling on their systems for us. Anyway thank you, continue doing what you're doing. I really appreciate it. Thank you.

Thank you. And our last question comes from Ed Woo from Ascendiant Capital. Ed, please go ahead.

Have you noticed any change in the competitive environment?

No, it’s the simple answer. If you break it up into three markets the software only, you know the players the speaker the AHT no, we're the major player in the market. And the system related pursuits like Mill Valley and Puerto Rico and so forth, no we don’t know if anybody knew yet, Ed.

Great onto another question I have is on the army contract. Is there any risk with any type of budgeting issues going forward? Or are we pretty much passed that?

Worthwhile, we're never passed it until the budget is passed. But having said that, a deal was reached between the White House -- within the White House and House Democrats to lift the budget caps and increase the debt ceiling for two years. The agreement will allocate $738 billion for defense and $632 billion for non-defense spending in FY '20 and $740 billion for defense and $634 billion for non-defense in FY '21. So, that represents about -- it was -- so the sequestration rules have lifted and the top line numbers have been agreed to for the balance of this administration. So, we should -- that said it's a very, very good sign. [Kyros] comes back in early September with 15 legislative days left on the calendar before the end of the year. I wouldn't be surprised, if a short term continuing resolution needs to be passed, but there seems to be good bipartisan support from the Democrats and the Republicans. Now, especially on the Senate side and the cooperation committees, they still have a lot of work to do.

And our last question comes from all Oswald Welsh [ph]. Please state your question.

Yes. I have a couple of questions. First of all, this is Dennis Welsh [ph]. I'm an investor. I need to know I don't hear anything, any comment about stock buybacks this quarter? How many and what average price?

Yes, we did not do any stock buyback in Q3. We have an active program in place, still, as you are probably well aware of it. One was purchased in fiscal Q3.

Second question has to do with whether or not you're familiar or have any information as to possible technology knockoffs in China? And if in fact, your equipment is also being used in Hong Kong?

The first question in China, I'm not aware of anything. And in Hong Kong, I do not know.

All right. Thank you.

You're welcome.

Thank you. That appears to be our last question.

All right. Well, that's very good Klahn. Thank you.

Would you like to give any closing remarks before we close out the call, sir?

Thank you for everyone for participating and listening to our call. And thank you very much.

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