Genasys Inc (GNSS) 2010 Q1 法說會逐字稿

Welcome to American Technology Corporation's fiscal 2010 first quarter conference call. I'm Robert Putnam, Investor Relations for American Technology.

With me on the call today is our Chief Financial Officer, Kathy McDermott. Our CEO and President, Tom Brown, was called away on Monday to attend an overseas business meeting with Government and Military Officials, scheduled for tomorrow. He has asked that I fill-in for him on this conference call.

After my reading of the Safe Harbor Statement, Ms. McDermott will recap fiscal Q1 2010 financial results, followed by my brief presentation. After my remarks, we will open the call to questions and answers.

Except for historical information contained herein the matters discussed are forward-looking statements within the meaning of Section 21E of the Securities & Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development, as well as our perception of historical trends, current market conditions, current economic data, expected future developments, and other factors that we believe are appropriate under the circumstances.

These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to, the performance of our Management Team, market acceptance of our directive sound technologies and products, entry of competitors, the possibility our intellectual property protections will not prevent others from marketing products similar to or competitive with our products, potential technical or manufacturing difficulties that could delay product deliveries or increase warranty costs, and other risks identified and discussed in our filings with the Securities & Exchange Commission.

These forward-looking statements are based on information and Management's expectations as of the date hereof. Future results may differ materially from our current expectations.

For more information regarding other potential risks and uncertainties, see the Risk Factor Section of the Company's Form 10-K for the fiscal year ended September 30, 2009.

American Technology Corporation disclaims any intent or obligation to update those forward-looking statements except as otherwise specifically stated.

I'll now turn the call over to Kathy for our Q1 financial recap. Kathy?

Thanks, Robert. Good afternoon, everyone, and thanks for joining us today.

Our first fiscal quarter of 2010 has started out strong. We again had record revenues for the quarter of $5.3 million, an increase of 114% over the first quarter of prior year. Our gross profit increased by 11 points as a percentage of revenue, and operating expenses decreased by 14% from prior year. We reported a net income of $1.8 million in the first quarter of $0.06 per diluted share compared to a loss of $881,000 or $0.03 per share in the prior year.

Sales to the U.S. Army Reserves totaled almost $2.8 million during the quarter. We've also continued to penetrate the commercial shipping market, International Coast Guard, law enforcement, and several Navies this quarter, where we're finding strong acceptance for the use of our product.

Our net revenues for the first fiscal quarter ended December 31st, 2009 were $5.3 million, an increase of 114% over $2.5 million recorded for the same quarter in the prior year. The revenue growth was primarily in our LRAD product line due to the increased sales to the U.S. Army Reserves.

As you may recall, our revenues were lower than normal last quarter due to a portion of these sales to the Army being pushed into this quarter. We had a small increase in our HSS sales for the quarter, offset by a reduction in sales of our SoundSaber product line.

The timing of our revenue fluctuates on a quarterly basis and the timing of the U.S. Military orders has been much less predictable in recent months, but our overall annual trend continues to improve.

Gross profit for the first quarter ended December 31st, 2009 was $3.1 million or 57% of net revenues, compared to $1.1 million or 46% of net revenues for the same quarter in the prior year. The improvement in gross margin is due to the increased revenues, increased absorption of our fixed cost, and decreased product cost resulting from improved manufacturing efficiencies and savings from higher volume component purchases.

Operating expenses for the first fiscal quarter decreased by $289,000 or 14% to $1.8 million from $2 million for the same quarter in the prior fiscal year.

Noncash share base compensation expense decreased by $421,000 as a result of stock options becoming fully vested, and commission expense increased by $173,000 due to higher sales.

Net income for the first quarter was $1.8 million or $0.06 per diluted share compared to a net loss of $881,000 or $0.03 per share in the prior year first quarter, an increase of $2.7 million. The net income in the first quarter of 2010 includes a noncash unrealized gain of $597,000 for the revaluation of derivatives related to war instruments as a result of a new accounting pronouncement that we adopted this quarter. The war and fair value will be adjusted each reporting period, with the change in value recognized as a noncash income or expense until they're exercised or they expire in August 2010.

In addition, we recorded a provision for income taxes of $85,000 during the quarter. The current quarter also included $151,000 of noncash compensation expense compared to $568,000 recorded in the same quarter of the prior year.

On the balance sheet, cash and cash equivalents decreased by $263,000 during the quarter ended December 31st, 2009. We generated $1.5 million of net income in the quarter after adjusting noncash items, but our accounts receivable increased by $951,000 due to the higher revenue and we paid out our 2009 bonuses in the first fiscal quarter.

Net inventory increased by $132,000 during the year, primarily to support current LRAD orders. Our trade receivables increased $951,000 during the first quarter due to increased revenues compared to fourth quarter of fiscal 2009. In spite of the increase we had only 42 days of receivables at the end of the quarter, compared to 44 days at the end of the 2009 fiscal year.

At December 31st, 2009 we had working capital of $8.2 million, which is an increase over working capital of $6.9 million at September 30th, 2009.

We continue to see a lot of demand for our product and remain optimistic that we'll have a strong 2010.

And, with that, I'll turn it back over to Robert.

Thank you, Kathy.

For my opening remarks, due to his being called away on Monday to attend an overseas business meeting with Military and Government officials, scheduled for tomorrow, our CEO and President, Tom Brown, has asked that I fill-in for him on this conference call.

While we are gratified with our 2010 fiscal Q1 results and pleased with our last four consecutive quarters, where we have recorded over $18.5 million in revenues and have been profitable on a GAAP basis, we are even more encouraged by the burgeoning market opportunities and applications for our proprietary LRAD systems.

Having implemented a solid technology and product foundation over the last several quarters, ATC is well positioned as the global leader in the acoustic hailing device market that we helped create.

In addition to our general order flow, we are working to strengthen our leadership position and grow our business through landing multiyear orders directly with Military and Government agencies and through incorporating LRAD into funded systems of large defense and commercial security contractors.

With security and piracy concerns continuing to escalate around the world, we anticipate our fourth consecutive year of record LRAD revenue growth in fiscal 2010 as we continue to experience global interest and demand for the unique capabilities of our long-range communication devices.

The ability to communicate, hail and notify, and determine intent at distance when unknown threats do not respond to radio calls on land or at sea is becoming an essential part of layered security and defense plans that attempt to resolve uncertain situations peacefully.

In law enforcement LRAD's ability to communicate clearly and intelligibly to large crowds and be deployed in search and rescue operations, swat operations, mass notification, for enforcing security zones, crowd and riot control, hostage or self-threat situations, and emergency responder situations is gaining traction as we expect increasing orders from domestic and international police departments and security agencies.

To date LRAD's penetration into wildlife preservation and control applications have been focused on mining operations. We also remain involved in wind farm and airport runway trials where LRAD is coupled with an avian radar system to steer birds away from wind turbines and prevent bird strikes during aircraft departures and landings.

While we are optimistic about the business opportunities in these and other wildlife preservation and control applications we believe the selling cycles will be long due to the Government, regulatory, and environmental agencies involved.

We have received correspondence from investors regarding the proposed name change of the Company. Having proved the ethicacy of the acoustic hailing device market, we believe it is in the best interests of our business and current and future shareholders to change the name of the Company to LRAD Corporation.

Over the last four years we have built the LRAD brand and identity to the point that it is well-known in many parts of the world. Also, in some countries our current Corporate name has at times proven a detriment in cultivating business relationships. Further, by changing the name of the Company we believe we will more closely align the Company's reputation with our LRAD product line and future growth strategy.

With the proxy materials associated with our March 24th Annual Meeting of Stockholders becoming available online later this week, we encourage all shareholders to read and vote on this and the other proposals at your earliest convenience.

We're off to a solid start in fiscal 2010, and yet we have much more to accomplish. We reiterate what we stated in yesterday's press release, while our quarterly results will remain uneven this fiscal year we anticipate a third consecutive year of record revenue growth and our first profitable fiscal year.

Operator, we will now begin the question and answer portion of this event, and ask that you queue up those calling in with questions.

Thank you. (Operator instructions.)

We have a question from Michael Ciarmoli. Your line is open.

Hey, guys. Good afternoon, and thanks for taking my questions.

Hello.

How are you, Robert?

Good.

I guess obviously the Defense budget was just filed on Monday. Can you point to where your funding is coming from or what I guess future funding levels look like for LRAD from within the Navy and the Army? And maybe on the Navy side what sort of I guess the attach rates are on new ship builds, even the same thing, the attach rates on some of the Army ground vehicles?

Well, I think from what we have all observed the normal funding process and the way that business is done in Washington has been dramatically altered over the last couple of years. And we have made good progress in getting LRAD out there. We did win the AHD Block Zero Award with the Navy, and also for the Army on small vehicles and small vessels.

At this point we continue to work with our contacts within the Pentagon, Government officials, and, in fact, we recently returned from a trip to Washington, D.C. where we had very good meetings with officials in the Government, which we believe will help further the LRAD opportunities in our Military and also in the Department of Homeland Security.

That being stated, we think that we wish things would go faster there, but we do feel very confident that eventually LRAD will be a part of some of these larger programs. At this point we are continuing to receive orders from the Army and the Navy under the awards I previously mentioned, as well as other programs that the Army and the Navy are rolling out. For example, in our last quarter where the U.S. Army Reserves purchased a lot of our LRAD systems.

Okay, okay. So they're still, you know, I can't go to one point in their place in the budget and look for that specific LRAD fund? You're operating sort of under those other contracts that might have been kind of the special set-asides or it sounds like you're still working to get this product slated into the budget so it's a longer term program of record?

Yes, and I think also what we have done is again work from top to bottom from Military men out in the field that have tested and used LRAD effectively and love it, on up to their commanding officers so that they know that the Military men and women need this product out in the field, and then also working the halls of Congress, as well as the Pentagon, to let them know of the importance of LRAD and how it can play a part in resolving uncertain situations and saving lives out there.

Okay, fair enough. And I may have missed it, did you guys give a -- give out a backlog number? And if you didn't do you have that, what you might be kind of looking at over the next couple of quarters to deliver?

The backlog going into this quarter was still pretty healthy. We announced, we had some orders that came in the end of last quarter that didn't deliver, it's almost a million dollars coming into the quarter, and we announced at the beginning of the quarter a SOCOM order of almost $1.1 million. So we had a lot coming into the quarter.

Again, going forward and the balance of the quarter it's been really difficult, more so even this quarter with the way that budgets have been working and Military spending has been as to timing of closure of opportunities and so forth. So there's a lot of stuff in the pipeline, the timing of when it closes and when the revenues will occur is just difficult to forecast.

Got you. Fair enough. All right. Thank you, guys.

Thanks, Michael.

Could we have our next question please, Operator?

Yes, our next question is from [Joel Acromowitz]. Your line is open.

Thank you very much. Good afternoon, Robert and Kathy.

Hi, Joel.

Hi, Joel.

Hello. I was wondering, I was going -- I'm glad that you at least addressed the backlog issue. I had a question in that regard. Could you perhaps give us an indication where looking into 2010, the fiscal year, where you think, where you're excited or where you expect some of the major growth to come from? Mainly in the Military, oil and gas, or pirate, shipping?

I think we remain mainly excited with our opportunities with the U.S. Military, as well as commercial security opportunities and international Military opportunities. We are seeing some very good progress in the wildlife preservation and control markets and as well as law enforcement as we continue to look for other markets to get LRAD into. But I think our main focus this year is going to be U.S. Military, Department of Homeland Security, as well as international Military and Governments.

Very good. What about have you tackled, at all, or rethought strategically this, you know, about your total available market opportunity maybe on a cumulative basis so that we can get maybe an indication of the potential market opportunities for the Company going forward?

We continue to work on that, Joel, to try to get our arms around what that can be. I think if you look at and as we have stated on previous conference calls, if you look at what our opportunities are here domestically, there's probably around 330, 340 large ships with the Navy and several hundred smaller ones.

And then beyond that the real opportunities lie with the U.S. Army, where they have several thousand vehicles that have already been deployed and more are being deployed around the world where we would like and are working to get LRADs onto.

Right now, these MRAP vehicles, Hum Vees, and others really have no means of communication to the outside once the troops are inside, and as they roll through villages they need to have a way to communicate while still inside the cabin. And so we see that as one of our largest opportunities.

We are also seeing opportunities out there, both for border security and other issues in international jurisdictions, where Military and Government officials have borders that they want to either defend or areas that they would like to use LRAD to hail, warn, notify, and determine intent.

Very good. And, lastly, I just -- I thought in terms of visibility do you think you're doing enough in that area to let people know or potential markets know about the potential for long-range acoustic directional sound? Any areas where you think you might be able to beef that up in public relations and get more focus on the Company?

Well, I think one of the main things that we're doing with the name change of the Corporation is to draw focus to that, Joel. And by tying ourselves with the LRAD brand name, which has been well received throughout the world.

Also, looking forward, on the opportunities that we have out there, we see that these large multiyear contracts that we have been working on, in some cases for several years and others several months, as we begin to land those, those are probably the best thing that we can do to be able to give people visibility going forward and also show the potential market sizes that we're working in.

Well, you've had -- certainly had some nice strings, a couple of nice years here and hopefully that'll continue, so we'll look forward to continued progress in the quarters ahead. Thanks.

Thanks, Joel.

Next question, please?

Thank you. Our next question is from [Steve Wagner]. Your line is open.

Hey, Robert.

Hi, Steve.

How are you? You guys did an awesome job this quarter. Congratulations.

Thank you.

Thank you.

These were numbers way better than what I expected. Real quickly, the 57% profit margin, is that something you guys think you're going to be able to maintain or improve on?

From a -- I mean part of that is just the volume. As you move more volume through, our fixed costs will remain pretty steady. I mean we don't have a lot of variable costs in our structure, so we should be able to, again depending on revenue levels, the costs have been pretty stable. As we get higher volume orders we're able to leverage our suppliers and getting better component pricing. But just being able to absorb our fixed overhead over a lot higher volume has been beneficial there. So as long as we can maintain a pretty solid revenue level we should be able to. It's going to fluctuate a bit, though, with the volume.

Sounds good. Certainly all of the things you guys have talked about on the call today are very, very positive I think going forward. And obviously it'd be nice if we could start to get the uneven language taken out of the press releases, but understand that's got to be there for now and don't have a big problem with that, especially when you come in with numbers like this.

Robert, we talked a little bit before about getting the word out to the investment community. Certainly appreciate the comments by the other folks getting the word out marketing wise, and that's obviously a priority.

But one of the things as longtime investors, you know, I watch it every day, and we talk to our clients. We're still a very large holder of ATCO shares. Two things or one thing I'm seeing is is that institutions that were in two or three years ago are still getting out. You're fighting, you know, we're seeing the tape all day long, very negative. Every time there's some buying interest there's a big block out there for sale. What -- are there any concrete plans over the short term here to get out and redeploy some of these good numbers to Wall Street and get some new, strong hands into our Company stock?

Yes, and I think again one of the things we've been laying is the foundation of performance over the last two-and-a-half years, and then the key also of having the name change of the Company gives us an opportunity to come out fresh.

I agree with that 100%.

And, more importantly, I think the other thing is that a lot of the institutions who got into our stock two or three years ago came onboard, frankly, because of HSS.

Absolutely.

We're an LRAD Corporation now, and so what we're working on and have been working on is going and identifying institutions, funds, and investors that have an appetite for defense and security plays, who would be interested in what we are today, not what we were three years ago.

And I think again the last missing ingredient that we believe we will gain this year and hopefully sooner than later is a large multiyear contract. By doing that, that proves once and for all the market of acoustic hailing devices and also we believe puts us solidly on the map financially for those, for our companies and institutions to take a look at us.

Okay, so are you comfortable in talking about some kind of a specific timeframe as far as all of this, as far as getting out and talking to some of these different various institutional managers that specialize in defense?

Well, I think we have already laid the groundwork for some of that, and I would expect that we will have announcements regarding where we would be presenting here in this fiscal year.

Excellent.

And again hopefully sooner than later. And part of the process again is getting the Corporation renamed and getting a little further down the road on the business of the Company.

Okay, and one other just small suggestion, Robert, and please pass this along to Tom, as well, if you would? For the last couple of years the Shareholders Meeting has kind of been a nonevent. And I know kind of in the past there's been some issues in years past with certain people to come in and kind of disrupt the meeting and kind of make it unprofessional. I kind of think we might be getting away from that. It would be nice if we could get back to a normal Shareholders Meeting where folks can come together, hear a nice presentation, just kind of enjoy an annual trek down to San Diego, so to speak. So I wish you guys would consider that.

I'll pass that along. Thank you.

Okay. Thank you.

Next question, please?

(Operator instructions.) I'm showing no other questions at this time.

While we're waiting if other people want to call in, there's a few other questions that also came in over the e-mail.

One question, in particular, is please elaborate on the current status for the following markets for LRAD -- offshore oil platforms, merchant vessels, wind farms, and solar panel collection facilities, airports, and mining?

With, as far as the offshore oil platforms we continue to work with another large company on those opportunities. That has been an area that we have worked on diligently with them. We have had some installations, but again it has not rolled out as quickly as we would have liked. But we are continuing to pursue that.

Merchant vessels, we continue to get a steady order flow from merchant vessels, especially those who are destined for parts of the world that have piracy concerns.

The wind farms and solar panel collection facilities, we addressed in my presentation in that we have ongoing trials, and we'll see where that goes. We are noting that Government, regulatory and environmental agencies are taking more notice of the bird problem with wind farms, and we hope that bodes well to speed-up the trial process.

Airports remain a very interesting area for us, and we continue to conduct trials there, but also we realize we've got a lot of regulatory hoops to jump through before those installations would become hopefully permanent and also would become pervasive.

Mining, we have continued to have mining orders. We continue to work with DeTect, who supplies the avian radar for that, and we expect further orders to mining concerns and other areas where wildlife preservation and control is an issue.

Another question that was asked is what's happening with the SoundSaber product and the mass notification market?

We continue to work with ADT on that, although frankly it has not gone very quickly. Orders were slow last quarter. One of the things we have been working on in our R&D efforts is turning some of our LRAD products into mass notification products and systems. We believe that multiple LRADs in a mass notification setting would be more rugged and robust than the current SoundSaber product line, and also because of its clarity and intelligibility would probably be a better fit, so we're working on that.

Another question that was asked, is the Company still pursuing the flat panel television market?

Those really were our efforts focused on HSS and to a lesser extent SoundSaber, and at this point we have not had recent conversations with the flat panel providers regarding that, as they continue to use lower cost sound solutions for their audio.

Another question that was asked is regarding Sound Vector. Is it still being marketed through [Echo] for backup alarms? And Kathy can answer that one.

So the Sound Vector technology we licensed to Echo for many years. That license has lapsed. They were not interested in pursuing that. They were purchased by a private equity firm a year or two ago, and right now that's not a direction that they were still interested in our product. We do still have the product. We're not currently marketing it, but it is available for future applications if we have a need for it.

So, yes, we still -- we retained the technology but at this point there are no further application that's being targeted for its use.

Operator, are there any other questions?

Yes, we have a question from [Orin Hirsh]. Your line is open.

Hi, how are you?

Hi, Orin.

Just going back in terms of crowd control and uses of the product in, let's say, the American domestic police departments, as well as I know you ship to China now, and I'm not sure what other countries you ship into. It's not an expensive product and you need to ship a lot of them in terms of making a meaningful revenue impact. Can you comment a little bit more on what the opportunity is in terms of potential revenue from that area alone? Is it just a small opportunity or it's bigger than you originally thought?

Well, again, like all of these markets where we're looking to get our arms around the potential size of it, the cost of the 100Xs, which are the ones at this point mainly aimed at the law enforcement agencies, run $3,500 to $5,000 apiece. So it's in a spot that for some police agencies that can be a little cost prohibitive, for others that's not an issue. What we have done from the G20 Summit from Pittsburgh last year, that was well received by a lot of law enforcement agencies when they saw how Pittsburgh deployed it, and spurred a lot of interest from law enforcement officials, both here and abroad.

At this point LRADs are being used in a number of municipalities. As I stated earlier, just not for crowd control or riot situations, but also for search and rescue operations and also for hostage or self threat situations and swat operations. For example, they're able to notify the entire neighborhood quickly that something is going on and to remain in your homes without having to go door to door, and then rather than deploying tear gas and rubber bullets into a home where someone is ensconced with hostages or in a swat operation are able to use LRAD to communicate, as well as use the deterrent tone.

And so it's very effective in that it frees a lot of police and emergency responders up from a particular situation where they would usually have to blanket it and go door to door, have a lot of officers on an individual situation. And so that's been our pitch to law enforcement to get them to understand that even though the cost may be a little high it's going to save them money in manpower and time and be able to better address these situations.

And are you saying they could do $5 million or $10 million a year?

Potentially. We signed up a few reps now that have taken that market and have better connections and contacts into that market that could approach it from a broader perspective than maybe we could. And some of these are international, China was quite large, and some of the other markets there are some larger opportunities, as well. So it could expand. The price of the individual, the 100Xs is not very high, relatively speaking, but some of these are also requiring 500Xs which are a little bit more substantial.

Hey, just switch to the Military, the potential Military contracts, particularly for vehicle use. Besides the U.S. Government are there any other Governments that are of meaningful size potentially for orders, where you've gone through extensive testing and you're towards the end of the process?

We are working with international Governments and Militaries on larger LRAD deals, and that's about as much as I can say at this point.

Okay. And, finally, just on future expense levels, you know, things, obviously you've cut things down tremendously and that's why you're able to see those kind of operating earnings, operating margins. Is there other -- can you just comment on future expense levels? Is there anything more to do here or this is where it's at and hopefully commissions get bigger as sales get bigger?

Well, the expenses are pretty thin right now. We need a certain gate level to operate. There's certain requirements for public companies, as well. So at this point we're at a pretty reasonable level, as you said, hopefully as revenues increase then commissions will increase. And there may be, there's certainly some variable costs that will increase with volume, but for the most part we're at a pretty stable level right now.

Okay. Gross margins are obviously favorable this quarter. Was there anything nonrecurring there or it was just a good mix or some of the projects that you've been trying the gross margins are better are kicking in?

Yes, there is mix based on the customers and the product lines, so we did have some favorable mix there. But also just the volume, the volume, absorbing the fixed overhead over much greater volume levels has helped us, as well. We were able to get much better component pricing on a larger order than we are on a 10-piece order, so that's been in our favor, as well.

If you looked at the next few quarters what would take as a best guess as to the margin range?

The margin is going to vary based on revenue and, as you've indicated, revenues are very difficult to predict. So as those (inaudible) run on a lower revenue quarter, our margin is going to drop again, but on a higher revenue quarter we should see pretty comparable to what we're seeing here.

Okay. Thanks.

Thank you, Orin.

Do we have another question, Operator?

Yes, we have a follow-up from Steve Wagner. Your line is open.

Yes, just to follow-up on that last gentleman's first question, Robert, I don't know, several months ago or late last -- sometime last year there was some human rights organizations that put out some -- they were upset over the fact of the deterrent tone. Have you folks been working with them, at all? Or do you view that as a big problem with regard to working with local law enforcement?

We were working with local law enforcement on that. I think for local law enforcement applications really the communications side of the LRAD, which is its strongest suit in all our applications but especially in law enforcement, is the vocal commands. Either they're repeated ones, where you have a large crowd and you want to be able to say the same instructions over and over again using the MP3 player, or in a situation where you're closing an event or opening an event and you want to communicate with everybody quickly.

So the only real need for a deterrent tone is really to grab somebody's attention in a swat situation or also for a self threat situation if you try to get their attention on a bridge or a building, but for most law enforcement applications the tone is not going to be an issue unless there is crowd and riot issues, and I think those are fairly -- they don't get too many of those in the United States and in other parts of the world they may be more common, but I believe that for law enforcement they really are looking at the communications aspect of LRAD and what it can offer as a vast improvement over their current bullhorns and megaphones.

Okay. Fair enough. And just one other real quick question. Appreciate you guys taking the time. R&D, I mean what are you looking at maybe over the next few quarters on R&D spending? And any enhancements or other new products based upon LRAD technology coming on the horizon?

Well, I think R&D expenditures are going to remain about the same. And we tipped our hat a little bit today regarding pointing LRAD at some of the mass notification opportunities that we had been pursuing with SoundSaber.

And then also we continue to enhance the products, and as we go out into the world and you use LRAD in different mounting configurations, especially as we get into the unmanned surface vehicles, unmanned aerial vehicles, and some of the other areas, there are always different customized versions of LRAD that they want. The base unit is the same but some of the accoutrements that come with it are specialized. And so we are continuing to work with the agencies on the other side as to what those need to be.

We're also looking at the multiyear contracts of incorporating follow-on maintenance contracts and other things with them as a way to extend our reach with these customers and also on the LRAD product line.

All right. Thank you, Robert. And again you guys had a great quarter. Keep up the good work.

Thank you, Steve.

All right. Bye.

Do we have another question, Operator?

We have no further questions at this time.

All right. We appreciate everyone's attendance on the 2010 fiscal Q1 conference call. a rebroadcast of this conference call will be available in approximately 24 hours. Thank you.