Good day, ladies and gentlemen and welcome to Fiscal Year ‘15 Financial Results Conference Call. All lines have been placed on a listen-only mode and the floor will be opened for 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, Kat. Good afternoon and welcome to LRAD Corporation’s fiscal year 2015 financial results conference call. I am Brian Harvey, Director of Investor Relations for LRAD. On the call with me this afternoon are Tom Brown, LRAD’s President and Chief Executive Officer and Kathy McDermott, our Chief Financial Officer. Mrs. McDermott will recap our fiscal year financial results, which will be followed by a brief presentation from Mr. Brown. After their presentations, we will open the call to questions. But before I turn the call over to them, 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, see the risk factors section of the company’s Form 10-K for the fiscal year ended September 30, 2015 that was filed this afternoon. LRAD Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated. I will now turn the call over to Kathy for the fiscal year financial results recap. Kathy?

Thanks, Brian. Sorry for the delay there. So, LRAD Corporation’s fourth quarter revenues did not develop as well as we had expected. There are a number of opportunities that we expected to close in the quarter that have been delayed. While these opportunities are not reflective in the fiscal 2015 results, we feel confident that these programs are not lost and we will benefit from them in fiscal 2016. We announced several orders at the end of the year to the State Department, National Guard, Coast Guard and the Army which while small orders represent key markets for our products with strong potential for growth. During the quarter, we shipped 500,000 mass notification orders to a city in Asia to enhance their Tsunami Warning System. We also delivered a 560,000 LRAD-RX order to the U.S. Navy for long-range communications for Navy vessels. We remain optimistic about our business opportunities and are aggressively pursuing them to grow the worldwide LRAD business. Revenues for the fourth fiscal quarter ended September 30, 2015 were $4.4 million, a 40% decrease from $7.4 million reported in the fourth fiscal quarter of 2014. Revenues for fiscal year ended September 30, 2015 were $16.8 million, a 32% decrease from $24.6 million reported for the prior year. Gross profit for the quarter ended September 30, 2015 was $2.2 million or 49.3% of net revenues compared to $4 million or 54.8% of net revenues for the fourth quarter of the prior year. Gross profit for the year ended September 30, 2015 was $8.5 million, or 50.8% of net revenues compared to $13.8 million, or 56% of net revenues in the prior year. The decrease was primarily due to the decreased volumes and lower absorption of our fixed overhead cost partially offset by lower freight and warranty cost and bonus…

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

Thank you, Brian, and thanks for joining our call. Frankly, fiscal 2015 was a frustrating and disappointing year. We entered the year with plan to exceed our 2014 fiscal results and even at the midpoint of 2015, we were still confident that we had a strong chance to achieve higher results. Unfortunately several opportunities that we were working specifically in the international oil and gas sector and some domestic programs were delayed. They were not lost. Our product is spec-ed into these programs and we anticipate that they will close in 2016. As a result, we have increased our 2016 targets over the original 2015 levels. Even with lower fiscal year-over-year revenues, we still achieve profitability and positive operating cash flow. We did this while adding depth and experience to our domestic and international business development teams, strengthening our marketing department and making investments in enhancing our product lineup. From a product standpoint, although U.S. Defense order has made up only 20% of our fiscal 2015 revenues, we received key orders from the National Guard, State Department, U.S. Coast Guard and other customers that have strong business potential for us in 2016 and beyond. We also continue to work significant military opportunities in Asia and the Middle East. We responded to a new RFP issued recently for the U.S. Navy Military Sealift Command and Coast Guard. In my time at LRAD, we have won all four of the previous U.S. Navy AHD RFPs and we are in a strong position to a win a fifth when the award is announced in the first half of calendar 2016. The National Guard remains the top priority and a large business opportunity for us. Recently, we hired a consultant who has extensive experience in contacts within the Guard to assist us in expediting…

Great. Thank you, Tom. We will now open the conference call to questions for management. We encourage callers with questions to queue up with the operator as soon as possible so there will be minimal lag time between each caller. Kat, would you please instruct the callers on how to queue up their questions.

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

Actually Kat I received a few questions via e-mail, while the queue is building why don’t I ask one of them right now. The first is we had a question - it’s going to be for Kathy regarding explaining why the reversal of the valuation allowance against the tax asset was taken. So Kathy could you address that?

Sure. So what you look at in evaluating your deferred tax assets is both your historical results which we have been – we have reported profitability over the last 6 years and also your future forecast of what you anticipate your taxable income to be over the planning horizon. And based on that, we felt confident that it was more likely than not that we would be able to recognize and realize some of those deferred tax assets, which are primarily NOLs as well as R&D credit and some timing differences. But we felt confident that we would be able to recognize a portion of those assets and as a result we reversed the non-cash entry, we reversed a portion of the reserve, the valuation allowance against that for that tax asset in the amount of $8.3 million. So, that’s recognized as income in the quarter, but it is a non-cash entry.

Great. Thank you. So Kat we will go to the queue now, if there is any lag we can go back to additional questions I received via e-mail.

Certainly. And our first question comes from the Josh Nichols from B. Riley.

Yes. Hi everyone. Real quick, you mentioned the navy RFP and the company has had a lot of success in the past with that, how big is the award, anything you could tell us for details?

Initially they did not disclose the amounts of the RFP, most of the RFPs are IDIQ, so it’s indefinite delivery, indefinite quantity. We are hearing that it’s been bumped up to 80 units was the last adjustment. So it’s approximately a $6 million.

Okay, great. And then could you talk a little bit about any currency risks the company has, whenever you are selling these units throughout the world given the strong dollar in pricing?

The currency risks that we have, we don’t have any internal currency risks because we sell everything in dollars. But the problem that we have had this year part of the oil and gas delays related to the currency situation and also the cost – the price of oil. But a caller I think it was on our second earnings call this year, brought up the fact were we impacted by currency and at that time I answered we weren’t, because at that time we were not impacted, but as the year went on we definitely saw some currency impacts. Some of the customers were holding back because the dollar became a little strong against the local currencies.

And then could you talk, any idea as far as some of the slippage into 2016 for any dollar value or any details on the projects that you could give us that might have been pushed back because of low oil prices and what not?

Yes. The oil and gas projects that we are working, we are still working and we feel confident that this should materialize in 2016. Approximately they run between – in total between $5 million and $7 million and some of the domestic projects that we are looking at were a little bit less but pretty significant for our business.

Great. And then any update I know the company it’s been moving into the mass notification space and there were a couple of bids for some regions in the Middle East I believe that were large dollar value, high millions or $10 million plus range?

Yes, unfortunately, Josh, I mentioned on the last call that we have lost that one bid to a competitor. So at the current time we are working on a couple of opportunities. There aren’t any tenders on the street right now, but we are working on a couple of opportunities especially in Asia and Southeast Asia in the mass notification space that would be pretty significant in size. So we are continuing to work international opportunities, unfortunately that one in the Middle East we lost it to a competitor.

Okay. And then last question since the company has dividend that they are paying out. Any idea for how you are thinking of structuring this, is it a percentage or free cash flow or longer term how you think about the dividend?

Well, on the first – the first take on the dividend we looked at our results for the year and we achieved basically $0.04 in operating profit. So we are looking at – we reinstituted the dividend at a $0.01 for the quarter and it’s up to the Board to decide on a quarterly basis but the intent would be to keep this dividend intact for short-term, short term through the year.

Thank you.

Thank you, Josh.

And our next question comes from [Lloyd Korten] [ph] from Unique Investments. Lloyd, please state your question or comment.

Okay. Hello everybody.

Hi Lloyd.

Hi Lloyd.

Hi. Boy, I had a bunch. Oil and gas, last year what percentage of our business was that part of the – what that industry, what did it contribute last year?

Last year, Lloyd it was very small and we were anticipating a very large piece of business coming out of the oil and gas sector and we are anticipating a very large piece coming out in 2016. We are working on three sizable projects and we are – our product is spec-ed into each one, so we feel confident that once the projects are awarded that we will be successful. But in terms of oil and gas for 2015 the percentage is it’s less than 3%.

Okay. I bring it up for a particular reason, because the first reason we were given for value to grow our revenue and we were using this oil and gas which in the past has been just a fraction of our revenue in our business and I think that is something – I feel it’s something strange about that, it just has not been that important and it’s kind of the first excuse to put out there for the weak quarter. Yes, it would be nice if we got it, but that’s not been where our growth has been or where our product is probably most needed in this world. My disappointment is that we have the award winning products that is in dire need all over the world as terrorism spreads and mass notification is now more important than it’s ever been in the history of the company, of the country, and they are going backwards. National Guard, what we sell, 2, 3, 4 units, I am guessing out of hundreds and hundreds that are in dire need of it. Especially what happened yesterday where we need someone to be able to roll in and it goes about 12 square miles, 9 square miles where they can be communicating because nobody knew what was going on and we have the product that would inform then. It’s almost a no-brainer and we talk about budgets and the difficulty of selling it and trillions and trillions are being spent every year by governments. But for some reason, they are not getting the message of how urgent it is to have this product from us and that is one of my great disappointments. This should be a panic to be buying our product all over America [indiscernible], because we don’t know what’s coming next, but everybody is in fear of it and we need to be able to communicate with the population whether it’s where the hospital is, what areas to stay out of, whose, what lost children we have, where you can get water, I mean there is disaster a day all over the world and we are not taking advantage of it. And I have to blame management for not executing and again award winning products. There is no better sales product that anybody can have when you are calling on whether it’s Homeland Security. I mean, $16 million a year, a drycleaner does that, for crying out loud. We have got salespeople all over the world and we are going backwards. And we have had, with all due respect, we have had promises every quarter going on and on and on about the business that’s going to come in the next year and it’s not. And what is management going to do about that? That is my number one question.

So, firstly, let me say, the San Bernardino Police Department has purchased LRADs in the past and they have LRADs on their vehicles. And in terms of this business, we are dealing with governments in terms of priorities a lot of our product is not an urgent priority.

Tom, LRAD is not mass notification, it’s mass notification that these counties needed. San Bernardino did not have a mass notification that can be rolled in immediately to control the whole situation. It’s imperative. And someone has got to get, I am sorry…

What positions have we lost other than the one big opportunity in the Middle East, we haven’t lost any opportunities. We are chasing everyone. We are chasing everyone.

But we are getting to distribution, we are not getting the orders, and there is plenty of money out there in this world that someone has got to put us further up on line, the salespeople, the sales manager, whatever it takes. We have got the product. You talked about that we are putting money into product development. We have the two best products in the world. What we are developing? If we can’t get these out there, the way we should be, where revenues are on an upswing, then something is horribly wrong. For me, I have a big investment in your company because I believe in you, I have been out there, I believe in the team, I have seen the products and I made a decision based upon that. I am not a trader, I am an investor and I own a piece of the company and it is just not performing. And something has to be done to change that. I don’t want to be back here a year later and hear about how great we are going to do next year, which we heard last year and we are not performing. Am I wrong about anything?

Well, we are out there everyday I have people all over the world that are trying to promote our product and sell our product and it’s the lumpiness of our business, but that’s we were anticipating a very strong 2016. We are in position for a strong 2016. Unfortunately, those delays on our product would have a different discussion right now if we had been able to close the deals that are out there, that are hanging out there, but I hear what you are saying.

Tom, they are running for $40,000 toilet bowels. Somebody knows how to get the money.

We are as disappointed as you are, Lloyd, on the results.

In homeland security, where I mean the country, people are going to panic. Okay, I am not a panic, but people are going to panic what we need to be able to communicate with them and we have the product, the best award winning product of sales, but at this time that’s not getting sold. When we go to the shows, I don’t know who is selling at the shows, but something is not clicking in our company and I am a disappointed shareholder and I am sure there are others. I am shutting my mouth now as I would like to hear other people’s opinion on our company. Thank you.

Appreciate the call, Lloyd. Kat, we will take the next caller if we are waiting. We received an e-mail question regarding the backlog. So, Kathy, can you address the backlog for the year

The backlog at the end of September was $4.5 million. Those are firm orders. We only report backlog in our 10-K based on orders that we have received. So, it’s $4.5 million.

Great. And now, we will take the next question, Kat.

Thank you. From Jared Cohen from JM Cohen & Company.

Yes. Just I guess to follow-up on what the other shareholders said, I mean, I guess whether you could still elaborate a little bit more. It seems like the product is not being used by take nationally by police department for either crowd or riot control. I mean, you look in either Chicago or Baltimore or New York and you haven’t seen those products as the LRAD being used for either mass notification or for riot control. I mean, could you elaborate on that or even just learning from the experiences to even go in the market to police forces around the country to be using those products?

Go ahead, I am sorry.

No, go ahead.

Okay. We sold into a number of police departments throughout the United States and the product was used in Ferguson very effectively. And the Chicago PD owns product. New York PD has used the product on a number of occasions. They own some. And we just sold some small units into New York again this year, some additional buys. In terms of Baltimore, we are working closely with Baltimore Police Department for frankly the administration of Baltimore, the Mayor and her administration are blocking the purchase. I think that they seemed to have welcome the Riot the last time and they have blocked purchase so far, but we are sold into a number of large cities and with the Presidential election coming up and the Cleveland and Philadelphia will be hosting the conventions, we anticipate some purchases from both police departments to help with crowd control and law enforcement has been a very strong, continuing strong market for our product, not just domestically, but also internationally and the thing with the law enforcement purchases is that they usually tend to buy our smaller products, so the revenue is not as large as selling into the oil and gas phase, which is a much larger opportunity for us.

I can’t understand. We will take the law enforcement. How much last year was that as a percentage of revenue overall?

As a percentage of revenue, give me a second, I’d say was close to 20%.

Right, because it seems like – that seems appropriate, it seems like it could be even be larger worldwide, it seems like it could even be larger. It seems like there is still….

I agree with you. The one thing that we have seen recently in Europe, Europe has been a very hard market for us to crack with our LRAD product, but now with the refugee crisis, we are getting, the product is being much more well-received and we have some small opportunities opening up in Eastern Europe and then also we are working hard in France right now, because I think he is Prime Minister Hollande has put together a large budget for homeland security. And we would like to get a piece of that budget. So, we are working that opportunity right now. I have a person in Paris right now.

Okay. Getting back to the U.S. military because it’s always been talked about one you mentioned the Navy, but there has always been an Army contract out there that’s always supposedly going to be huge upwards of I think seven figures, is that still out there or not out there?

Well, the first running thing in this year we were informed and I don’t say anything on these calls unless there is substance behind it. And we were informed at the beginning of the year by the army that an RFP would hit the streets by late spring. And obviously we are in December there is still no RFP, but we have had some conversations and we anticipate something definitive coming out of the army – U.S. army this month. So we should hear something one way or the other this month. And if – we are anticipating it’s going to be favorable.

No, I mean the only reason I brought it up because what they – the Army has put out new [indiscernible] coming out over the course of the next 5 years, so it’s already been put out there a multi-billion dollar order, I know that’s one of the reason I have brought this up?

Yes. That whole thing is under protest, that’s when you are dealing with the government these things drag on, they would take a long time. But that whole joint life of tactical vehicle program is under protest, it was awarded but there is a protest right now. But in terms of the military, U.S. military 5 years ago it represented over 68% of our business and currently the defense piece of it is about 12% to 15% of our business unfortunately. So on the last 5 years, there has been less and less military spending, but we anticipate a pick up and we are hopeful that we are going to hear something very positive this month.

Alright. And I guess does that relate to because you always brought it up a few times what is that related to Fort Bragg or something like that or…?

No, this is actually coming out of the program manager for this program is based in Picatinny, New Jersey.

Okay. My last question is related to how many direct sales people do you have working at the company now?

Direct people, we have who are all in the sales organization basically but the direct number is 12.

12 and do you – what type of annual criteria do you set for those people or do you try and set an annual sales initiative or something like that?

Yes. What we do is we have a year end sales meeting or we bring all the sales team together and we go through and we do a bottoms up budget and we would look at realistic opportunities throughout the world. And we will set individual targets for different territories. Right now we are setting much higher targets for our international sales team than our domestic sales team because we have more opportunities out on the international space. So we do set individual targets for each one of these sales people to hit. Unfortunately in 2015 we didn’t achieve those targets.

Okay. Last question is that China did you achieve your target for China last year or?

China was good, China was our – I would say combined kind of was our largest customer in 2015 and we can…

We did over $3 million.

We did over just about 20% out of China.

Okay, alright. Thank you very much.

Thank you.

Thank you. Kat, we will take the next caller.

Certainly the next question comes from [Edward Geaf] [ph] an Independent Investor. Edward?

Yes. Hi, sorry about that. I was just curious, I mean the company and I hadn’t been on a call in a while, but the company is so small I mean you guys are seeing $1.50 a share and you have a bunch of cash and you have this product, I just feel as though you keep on talking about how great the product is, how great the product is and maybe we just don’t have the connection and maybe if were a bit bigger and we just had more cash around, we can maybe put these things and have access to more people and more countries. And my thought is I mean it’s very nice you are paying out a dividend, but I mean I don’t really think anyone really cares, no one is buying the stock, I guess is my opinion because of a possible dividend or because of the stock buyback, do you guys ever think about this having a sales process and maybe seeing what you guys get for this kind of business like maybe this we are in, I am not saying you guys aren’t smart and you guys aren’t trying your best and saying maybe this product we are in a company that had more capital maybe had some more existing resources maybe this is something that another company would find extremely valuable?

But in terms of the sales we have sold into over 71 countries with our small team and we have reps and resellers placed throughout the globe and this is not off the shelf product that people are looking to buy immediately, it takes the long selling cycle because it’s governments and it’s dealing with budgets and everybody. I know shareholders don’t like to hear that and they think that’s an excuse. But it’s the truth. It’s a long selling cycle and this army deal that I just mentioned on the last call we have been working it since 2007. So these are long selling cycles that if we were larger we would still be waiting since 2007 for some of these large deals. So it’s a very time consuming heavy lifting type of product to sell but we do make the sales, they don’t go away. We haven’t lost any business. We are chasing all new business that we can. But in terms of the sale process for our products, I would think even if we were a little bit larger we wouldn’t be doing much better.

Right. I mean I know that you guys think that you are doing much large or you wouldn’t, I mean and listen obviously you want to return value to shareholders right that’s why you are paying up the dividend and that’s why you are buying back the stock. But I mean why not just take it one step further. And I mean you can at least kind of see what’s out there and if no one is listen and if you are right and no one is like listen, these guys are doing the best they can. There is no way for this business to improve we can add value, you know what fine then obviously we are sort of back to score one. You are going to return money to the shareholders the way that you think is best, but why not see what’s out there, why not even just take I mean the stock is at $1.50, really this company should not be public, I mean there is no real benefit of this company being public, right I mean it’s not like you guys are tapping into the financial markets for stock for – and you guys aren’t like raising debt, you guys aren’t selling shares, right. I mean, there really is no reason for this company to be a public company and I mean you guys always spend a lot of time like now on calls with guys like me and you guys spend a lot of effort filing the 10-Qs or 10-Ks wasting money on that kind of stuff, why wouldn’t we just try to take this thing private and see if anyone is interested. I mean my piece of price with what you find and maybe there is a company out there that because – I mean listen you guys have a total valuation of what you guys have like $30 million and I mean like that’s could be like a rounding error with some of these big guys, maybe they would pay you $60 million, I mean $60 million for a lot of companies is that very much, I mean $90 million is literally a rounding error for some companies and that would literally double or triple the stock price, what I am saying is the stock the year high it is $3, I don’t see the stock being $3 again for a very, very long time?

Don’t misunderstand me. There is a lot of opportunity for growth. And if you look at last year we had a very good year and we are anticipating very good year this year and if we hear some positive things out of the military the U.S. military this year that will be a very significant opportunity for us over the next several year because it will be, there is programs of record that run for years and if we can land the right program which we have been working out for very long time it will have a significant impact on this company. And at that time if somebody wants to knock on our door we will be very happy to listen, but right now we have been delayed on a number of significant opportunities once we bring them in I think we will see different results and it’s not – believe me we feel we have tremendous opportunity. We don’t feel like this is the way we are going to stagnate. We feel like the company is going to grow. And if you look at the year we did $16.8 million in revenue, but we still threw up $1.3 million profit – operating profit. And I would say regardless of the fact that the business is down or disappointed in the top line, we still manage the business well enough to be profitable. And we will always be profitable.

Listen, I am not going to harp anymore on this and I understand you guys are doing what you feel as the best you can do and you are waiting for this big contract to come in. And you are saying that basically once as they contract and as kind of like you said. I mean, your business is a very lumpy business. You mean people aren’t going to – companies aren’t going to look at you after you do that deal right. I mean, the carrot is hey, not that we just did this big deal, because your business is super, super lumpy, right. So, just because you do one big deal, I’d say next year, it doesn’t necessarily mean you are going to do another big, big deal, the year after. That’s not the way your business works and it wouldn’t – like that wouldn’t necessarily increase someone’s appetite to buy you guys. What increases someone appetite to buy you guys is the fact that you have a great product right and a product that can be sold year after year in big lumpy, I guess, I am sending a big lumps. So, my point is, is that I don’t think your valuation is going to go up that much more. People understand that it’s a lumpy business. You are going to have really big years, really small years. I am just saying that I think it’s a disservice to the shareholders to not take a look just because you guys are so small and just because some company – you be surprised that some company would pay for a good idea. And I think you guys have a great idea and is not even taking a look just because you might do a deal. Really, think about it, it makes zero sense, just because I mean who cares. So, yes, you are going to do a great deal next year. Let’s say you do a $20 million deal next year. I mean, who cares? It doesn’t mean anything for 2017 or 2018. You know what I mean, if the product is what you are selling and the product is as good as I think it is and as you think, then I mean it doesn’t matter what the sale is. It doesn’t matter what you guys do. You might be surprised with what someone some company to have a bunch of capital would pay for it.

Okay. Thanks, Edward. We are going to go on to the next caller, because while we have gotten queued up, but we will take it under consideration.

Next question comes from the Jeffrey Ellis from L Street Capital. Please state your question.

Hey, guys. My question has been answered. So, I am good to hear. Thanks.

Okay, thanks Jeff.

Next question Steve Wagner from Wagner Financial.

Good afternoon, gentlemen. Can you hear me okay?

Yes, sure Steve.

Good, thank you. I can pick it up, but to get on speakers easier for me. Boy, I think the last call that we are in questions or maybe one or two and now have this amazing array of opinions and variety of ideas. So, that’s kind of nice of at least some interest out here in this world. I have a question clarification. I didn’t hear clearly the first part of the call when you were talking Kathy about the accrual for the bonus. Was the bonus paid? Did I hear that correctly or there was not a bonus paid?

No, bonus was not paid. The adjustment was our lower operating expenses were because we did not record a bonus this year.

Okay. And so that tax benefit resulted from the $0.29 that was $0.25. So, can you tell me because I mean you did accrue I think for the first couple of quarters of the year for the bonus, what kind of impact did it making it of the material impact on the EPS savings?

The accrual for the bonus doesn’t have anything to do with the tax adjustment.

Okay. I didn’t mean it that way. I am sorry. I meant on the earnings per share. So, in other words, you reported $0.29 for the year, $0.25 of that is as a result of the tax break and then so $0.04 apparently from operating, but how much of that was the bringing back into the coffers of the prior accruals?

The accruals were all done in the current year. So, the net accrual for the year was zero.

Okay.

There was no adjustment in the current year from the prior year.

Okay, fair enough. Fair enough. And Tom, on the earlier – one of the earlier callers talked about this Army contract that you are hopeful for and we are all hopeful for was the 7-figure contract, but I think that would be low. I mean, wouldn’t that be a multi-year 8-figure contract when all was said and done?

When all was said and done, Steve, but yes, the original RFP that we were looking at, we were anticipating something that is 9-figures.

Okay. Well, alright. So, it’s good to be wrong in that particular regard.

But in that case, Steve, it will be spread over a number of years. It won’t occur all at once. And as I have mentioned in the past, once you get one of these contracts as long as you perform up to the expectations of the customer, these things keep on coming out. It becomes like an annuity as long as you perform.

Sure. And obviously, you correctly stated before that as long as you have been there, you guys have won every one of them and no reason to think that you wouldn’t. So, what do you think in your recent conversations with them in terms of the delay. I know, originally obviously there was the whole budget scenario to sequester all of that stuff. I mean, are we back on track do you think confidently in this regard or do you anticipate, I mean, what reasons would you think that there might be further delays if any?

I don’t – right now, from what I am hearing, talking directly, I am thinking that we are going to hear something definitive this month. And we are pretty confident we got something definitive this month.

So that would be outstanding. And again, I was a little bit garbled on part of this call. I know someone asked and you had mentioned about the National Guard contract, potential contract, one of the questionnaires as to how big it was and I didn’t hear the answer to that, could you reiterate that?

We didn’t talk about National Guard contract, Steve. What I mentioned in my….

National Guard opportunity, National Guard opportunity, I am sorry.

Yes, I mentioned in my remarks that we are pursuing National Guard opportunity. We have just run on new consultant who had very strong ties inside the guard and we are doing a demonstration next week on December 10 in Pennsylvania for the – actually on the 9th and 10th in Pennsylvania Guard. And the major in the Pennsylvania Guard is the equipment person for the entire guard, but he decides on what pieces of equipment should be acquired. So, we are looking forward to getting in front of him. He is receptive to the demonstration. And the guard, there is big opportunities there. We thought we were going to close the big opportunities this past year. We got a small – some small orders out of Kansas and Oklahoma and Michigan, but not didn’t achieve the expectation that we had, but it’s an opportunity that we are pursuing is still hanging out there and we are hopeful of closing it in 2016 and it’s a significant opportunity.

Okay. Well, that sounds good. So, that’s two significant opportunities that we can look forward to potentially for 2016. Go ahead.

Plus the oil and gas opportunity that would…

Right, absolutely. I think everybody. I mean, as you know I am financial advisor and I run a lot of portfolios we are trying. And I would say if oil keeps acting the way that it is, I don’t know that we are going to have any oil and gas companies. It’s the market is treating it as if no one is ever going to a drive a car again out there for some reason. It’s just unbelievable what’s going on out there right now. But moving on to my next set of questions and I appreciate your time on this, with regard to the dividend and in the past, I have not been a big proponent of the dividend, because like the prior – couple of prior callers ago, it’s not why people myself and others are investing in this company. We are investing in it because it’s a growth opportunity, but there comes a time when there is so much damage that there needs to be some damage control. And quite frankly, that’s the way that I see this. And so I am a little concerned that the dividend wasn’t a bit larger. Yes, I recognized the rationale $0.04 a penny per quarter, I totally understand that, but we have a lot of cash that seems like we continue to accrue. I mean, could there be an expansion of the dividend or do you feel like it’s going to be basically $0.01 a quarter for the foreseeable future.

Well, honestly, Steve, that’s not up to me, that’s up to the board, but the board is – we went through our presentation for 2016 and the board is very confident that’s why they were willing to declare a dividend and also expand and extend the buyback. There is a strong feeling that our stock is closely undervalued. The dividend itself at $0.04 dividend on an annual basis at our current share price is about a 2.7% yield

Yes, good dividend. Good percentage.

I think that if these opportunities materialize, I am sure that the board will reevaluate dividend on a go forward basis.

Absolutely and with regard to further opportunities, and I think again one of the prior callers I think correctly alluded to the fact that we can’t be thinking in terms of, we need to get this big contract and I know that’s not the way you are thinking and the way management is thinking there for sure but his point and I agree is it, we should be having business flow in particularly in light of all the tragedies that are going on that really a mass notification can make a difference of if not – certainly not before but after the process and securing people’s further safety and I know you hired Karen Bowling earlier in this year to work with municipalities of the mass notification, emergency notification, how is she doing so far, it’s been several months that she has been with the company, can you give us an update on her activities and her progress?

Yes Steve, I focused her on the domestic emergency management market which is going after municipalities in the U.S. We attended the NEMA trade show which is brings all the domestic emergency managers and their staffs together in Miami, Florida and we just attended in Las Vegas the International Emergency Management Association trade show and Karen is working on a number of states. She was here yesterday, we have gone through the focus and she is working on, we have ten major states with a number of disasters in terms of hurricanes, in terms of flood, tornadoes, fires and budgets. We look at the budget, who has the money to actually spend, so we are targeting these states, we have demonstrations, we are bringing our trailers into the states to demo the product and we are heading throughout all the counties within the state. We are not just going after the capital and she has got some very good political contacts that she is working with and we feel very good about what she is started. She is as frustrated as the rest of us because she felt that we should have a sale by now but it takes a lot longer than it looks from the outside.

Well and again I just, this is just a comment, I mean, I think her role is extremely important because when one municipality buys others follow and that answers the whole dilemma of lumpiness, right. If you begin to have that as an action then you have a consistent and steady increasing flow and now all of a sudden it’s a lot easier to value a company and be confident in quarter-over-quarter and certainly year-over-year results. So obviously it can’t be stated of how important her role is and this may be and sound like a dump question but I will ask it anyway, I mean are you as a leader of the company are you confident and comfortable with what you have seen thus far from her efforts?

Yes I am and I have also brought on some couple of new experienced sales people in the area and we are also – we got this government purchasing for so long but we are now targeting a lot of the commercial and industrial space for a mass notification product, we are looking at chemical plants, we are looking at utilities and these are not, these opportunities are not tied into budgets and we just had enough this last quarter, we are going to be shipping it this quarter a nice utility in the Sate of Texas that we are going to be putting our mass notification system in and they are tied, the company that rep products with us has a nice 50 state footprint of sales people. So once we get this front end we are going to be trying to work these guys across the country.

Okay, well that’s very, very good and obviously we will look forward to further progress and one thing that I track always is insider and institutional buying, when of the things that I have been very happy to see is has been there we have actually even met good institutional buying, I mean institutional buying of the good kind long term mutual fund hands but that said my big interest going forward and of course we have increased our share base in the last quarter as well, in fact we have been increasing it in the last two or three weeks but I think we are going to stand pat and I think one of the signals that I will see is you know when I see more of the directors and more of the insiders being more serious in terms of that aspect of it and I mean larger numbers of share purchasing. I mean that will be my next biggest signal. I am big believer in insider buying as a signal but I am also a big believer and I would say, you got to do this but it’s something that I am looking for, so I will just leave it at that.

Alright thanks, Steve, we got to take the next caller.

And the next question comes from Jonathan Manela from Edge Strategy Group. Jonathan, please state your question.

Hi guys.

Hi Jonathan.

Yes it seems like you have spent a little bit time on this call, on your heel, so I am going to try to kind of refocus this question and ask you just to lean into a little bit, you know it seems like when I read about the mass notification opportunity, write a business at $4 billion in 2015 growing to $8.5 billion by 2020 are pretty significant numbers and when you break down how they view that in terms of segmentation three of the top five are public safety emergency communication solutions and integrated public alert and warning, right three areas that seem to be in your wheel house, alright 2% of ….

Let me just say if you break down that amount, the amount for the speaker piece which is where we are the strongest is about a 150 to 200 million right now, it’s growing but it’s about 150 to 200 million and there are number of large players, we call them large players but even the large players if you take a look at federal signal and look at their K, now they do about 30 million in this space and they are a multibillion dollar company, so the speaker piece is about 150 to 200 million and for a small company if we can grab 10 to 20% of that, that’s a pretty significant increase. The whole mass notification space is a lot of software, it’s a lot of call out systems, it’s a much broader fire alarm, it’s a much broader market and it’s growing, even the speaker segment is growing. Right now the segment where we are targeting is about 150 to 200 and that’s globally.

Yes, so I guess the area surrounding my question and I know this was a tough year and I know that things got kicked into 2016 and you guys are forecasting you know growth-on-growth from where you would have been for 2015, that’s great. You know but for me as a shareholder, I think back as we are heading into February, that it was five years ago that I stroked the check at 265 or whatever it was a share, that’s a long time to be sitting around with those shares down about today and to be looking at a year that look like 60 million in revenue. The thing that’s frustrating, I think some of the other people have mentioned and I guess here is my question, there doesn’t seem to be any big thinking in terms of where we are going to be in the next couple of years, it feels like success is going to look like a $30 million revenue year in 2017 and I don’t understand why are you not as the CEO of this business looking to capture a much larger opportunity, you have got capital, there is clearly a lot of demand, you seem to be swimming on the perimeter both internationally and domestically. What is it going to take for this company to throw up $100 million revenue year and is a number like that in your horizon?

Jonathan, right now we still have about 90% to 95% of the global Acoustic Hailing Device market, even this year we still have about 90%, 95% and I mentioned the mass notification market for speakers, it’s between $150 million and $200 million depending on who you look at. But in terms of growth we see tremendous growth both in our acoustic hailing device area and also we are attacking one of the callers earlier who was complaining about oil and gas. Oil and gas is a tremendous opportunity and these are opportunities that were pushed out actually are just pilots and they are very large pilots. So the oil and gas opportunities are very big. Of course we are bucking the currency situations and also the price of oil, but the investments we are pretty confident will actually be made in 2016. We see tremendous opportunities but they are very slow to develop. We don’t – as I have said before we are losing anything, it just takes a long time for us to close some of these deals. We don’t lose them. But we have a very large percentage of – we are the world leader in acoustic hailing devices and we are…

You are the one the world’s leader throughout this phase, $16.5 million revenue, it’s laughable and I am not laughing at you, I am laughing probably more at myself, but…

It’s frustrated you Jonathan I mean it’s frustrated you…

Do we have meaningful growth consisting growth ahead of us, are we on that track or are we chasing bigger one-off opportunities that took 3 years to develop and then the next batch will take another 3 years to develop and it will sort of be like two steps forward, one step back every 3 years we are going back to or is something going to change?

Well, there is always going to be lumpiness in this business but it changed as I have been saying. And I think you and I met years ago when the RFI had disputes on the U.S. military. U.S. military is still off as I have said opportunity that would give us a pretty steady flow of revenue, a nice base that we can have the lumpiness on top of. But we need that program or record that would give us a nice steady flow of base revenue. And then everybody can live with the lumpiness. But right now we have been on this thing since 2007 as I have said before. We are sort of confident that we are going to hear one way or the other this month what’s going on. And if it’s positive or negative we will definitely inform everybody, but we need that base and that we need we are going to have always – it’s always going to be lumpy because we are dealing with government. And we have got the budget cycles, it’s we have been saying this for ever, it’s a lumpy business. But we would like to get that one base piece of revenue and have that lumpiness on top of and we will have a lot of good year, so we are anticipating. We are very positive. We are anticipating future growth. We are anticipating very strong 2016. The Board wouldn’t have declared the dividend and if they didn’t feel confident that we were going to be able to achieve that. We have had 6 years of profitability. We are going to continue to remain profitable and we will see if we can get I don’t anticipate us getting to $100 million in the short-term, but I would like to see us get up into the $40 million to $50 million range in the short-term and that’s what our targets are, that’s more realistic and if we can achieve that we are going to – because I don’t need to invest a lot in my operating expenses if we can achieve that level most of that margin is going to flow through bottom line and that will make us a much more valuable company.

Yes. Well, it sounds great, let’s make it happen. Hey, listen I like the dividend despite with one of the other callers that I like the dividend and if it’s going to be lumpy and you have the cash flow, keep pushing the dividend, keep increasing the dividend. I think if I am going to have to sit around and wait, it’s nice to have the cash at the account every quarter.

Yes, we agree. So, we appreciate the call.

Yes, thanks Jonathan. Kat, we are going to take one more call since we are running past an hour already. So, we will make this the last caller.

Okay. The last question comes from [David Levick] [ph] from Summit Brokerage. David, please state your question.

Hi. And just for the record, I am a registered representative, not an analyst. You have given us some insight into the Board’s thinking on the dividend and the share buyback. Is there anything you can share with us as far as option grants to directors and management? Do you expect more of that at these low prices?

Actually, I do, because it’s part of our annual – we do an annual grant. And it’s a key part of our compensation. Our compensation is structured in this company if you look at it over the history of the last several years, it’s incentive-based. So, there haven’t been salary increases. There haven’t been any significant salary increases in the last several years. And in terms of the way that we structure our business is everything is incentive-based. So, we have a nice bonus plan in place. We have stock options in place. And if the company does well, the employees and this is throughout the organization, not just that the management, it goes through the entire company. And everybody is part of the bonus plan. Everybody is part of the stock option plan. And if company does well, we benefit. If company doesn’t do well, we don’t do well. So, it’s an incentive based system. And if you look at our salaries, they are very much below the mean average. For the company, our size we have done a number of comp studies, but the employees and the management are very happy to put more at risk. And as the company does well, everybody is usually happy.

Well, I would take exception to the at-risk part of being granted options don’t give you any risk, it’s all positive for management. There is no – it’s not what you call skin in the game being granted options.

No, it’s also an incentive delta to drive the share prices up.

Okay. Alright, that’s all I got.

Alright, thank you, David and thank you, Kat and thank you all for listening and participating in LRAD Corporation’s fiscal year 2015 conference call. A replay of this webcast will be available in approximately 4 hours through the same link issued in our November 19 press release. Thank you everybody.

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.