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…

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…

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.