Genasys Inc (GNSS) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth-quarter 2013 earnings call. At this time, all lines have been placed on a listen-only mode, and the floor will be open 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, Director of Investor Relations. Sir, the floor is yours.

Thank you, Giovanni. Good afternoon and welcome to LRAD Corporation's fiscal fourth-quarter and fiscal year-end 2013 financial results conference call.

On the call with me this afternoon are Tom Brown, our Chairman, President and CEO, and Kathy McDermott, our Chief Financial Officer. Mrs. McDermott will recap our fiscal fourth-quarter and year-end 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 potential risks and uncertainties, see the Risk Factors section of the Company's Form 10-K for the fiscal year ended September 30, 2013. 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 fourth-quarter and year-end financial results recap. Kathy?

Thanks, Brian, and thanks, everyone, for joining us today.

Following a rather lackluster start to the year as a result the federal defense budget constraints and the sluggish global economic market, we finished our year strong with $8.8 million in revenues in the fiscal fourth quarter, a 56% increase over the prior year fiscal fourth quarter and 51% of the total year's revenues.

In addition to the $2 million US Navy order announced in late fiscal Q3, a number of additional large orders were received for the public safety market, as well as other markets such as wildlife control, tsunami warning and oil and gas security.

Revenues for the quarter ended September 30, 2013, were $8.8 million compared to revenue of $5.6 million for the quarter ended September 30, 2012. Year-to-date revenues were $17.1 million, a 16% increase over $14.8 million in fiscal 2012. Our revenues will continue to fluctuate on a quarter to quarter basis based on the nature of our business and customer base and the timing of deliveries.

Gross profit for the quarter ended September 30, 2013, was $4.5 million or 51% of net revenues compared to $2.8 million or 51% of net revenues for the fourth quarter of the prior year. The increase in gross profit was primarily due to the increased revenues.

Gross profit for the year ended September 30, 2013, was $8.2 million or 48% of net revenues compared to $7.5 million or 51% of net revenues for the prior year. The increase in year-to-date gross profit was primarily due to the increased revenues, partially offset by unfavorable product mix.

Operating expenses for the fourth fiscal quarter increased $222,000 from $1.6 million to $1.8 million. The increases in spending included $450,000 for commission expense for our international sales reps, $65,000 for increased staffing, $58,000 for patent impairments, $48,000 for marketing and trade shows and other increases, offset by $440,000 of favorable legal and other professional fees as a result of truing up final costs and reimbursements related to the derivative lawsuit.

Year-to-date operating expenses increased $1.1 million from $6.2 million to $7.3 million. Increases in spending included $347,000 of commission expense, $332,000 related to legal and other professional fees related to the derivative lawsuit and threatened proxy contest, $156,000 for staffing and consultants primarily for business development, $74,000 for product development and testing, $66,000 for non-cash share-based compensation expense, $64,000 for marketing and trade shows and other increases.

In the fourth fiscal quarter, we recognized a one-time adjustment to other income of $271,000 related to a terminated license agreement. We reported net income of $2.9 million or $0.09 per diluted share in the fourth quarter compared to net income of $1.2 million or $0.04 per diluted share for the fourth quarter of 2012. For the year ended September 30, 2013, we reported net income of $1.3 million or $0.04 per diluted share compared to net income of $1.5 million or $0.04 per diluted share for the fiscal year ended September 30, 2012.

On our balance sheet, our cash and cash equivalents balance as of September 30, 2013, was $15.8 million, an increase of $1.9 million from September 30, 2012. The cash was generated primarily through net income adjusted by non-cash expenses, partially offset by an increase in inventory, which was increased to support our current sales forecast.

Working capital at September 30, 2013, was $23.7 million compared to $21.3 million at September 30, 2012.

And with that, I will turn it back over to Brian.

Thank you, Kathy, and I will turn the call over to Tom for a brief management presentation.

Okay. Thank you, Brian. Welcome to our fiscal year-end call. As I mentioned on our last call, we were hoping to end the year on a positive note. We were able to achieve that.

As Kathy stated, fourth-quarter revenue was $8.8 million, which is the second highest quarterly total in the Company's history. As a result, we achieved fourth-quarter net income of $2.9 million, which totally offset the previous nine month's loss, and gave us a full year profit of $1.3 million, our fourth consecutive year of profitability.

We also generated approximately $2 million of positive cash flow. Some of the highlights for the year, as I mentioned, we achieved our fourth consecutive year of profitability in spite of very difficult market conditions. Our US government and military business was down by 34% year over year, but as I stated at the beginning of the year, we are going to focus on increasing our international business, and we generated an 84% increase in those markets.

Revenue from China increased from $270,000 in 2012 to more than $1.3 million in 2013, and revenue from our mass notification products totaled more than $882,000, a very good result for our newly launched product line.

During the year, we restructured our sales team and brought in four new hires. We head into 2014 with a much stronger qualified team. Two of the new hires are completely focused on the further -- on further developing our mass notification business, and each has a strong background in this area.

In addition, we were awarded a $12.2 million ID/IQ contract with the U.S. Navy, which we were working on for well over a year and a half.

As we begin 2014, we are continuing to expand our LRAD business in the Middle East, Asia, and South America, and we continue to see strong growth potential in these markets.

We're also focused on -- and better positioned with new consulting support to continue to pursue large US military and government contracts. While we're hopeful that we will be successful in this area, the continued lack of a budget, sequestration, and DC gridlock keeps pushing these opportunities out. We continue to work to be in position when the gridlock breaks.

In 2014 we will also continue to develop our mass notification product lineup, and we will aggressively pursue new business opportunities in this space. We feel that the mass notification market offers much larger growth potential than the acoustic handling device market. While we are the world's leading acoustic handling device company and will continue to retain this position, our experience and expertise in this industry positions us well to capitalize in the larger global mass notification market, and we are focused on making this happen.

Our first quarter has historically been lumpy and usually not financially strong. However, we are off to a reasonably good start, and we feel confident that the quarter results will get 2014 off to a positive start.

And with that, Brian, let's go to Q&A.

Okay. 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. Operator, please instruct the callers on how to queue up their questions.

(Operator Instructions).

Giovanni, I actually -- we also received questions via email, and so I will just load up that first one. The first question was, could we provide an update on the status of the share repurchase program?

Okay. Well, as we discussed in the 10-K, we implemented a stock buyback program at our last Board meeting, and to date we have made no purchases against that program. The program will continue through the end of the calendar year, and at that time we will evaluate the continuation of the program with our Board.

Thanks. Operator, are there any questions?

Les Sulewski.

Congratulations on the strong quarter. Very nice to see that. First question I had for you was going, looking back on the third quarter of the previous quarter and looking at this quarter, how much of the revenue came from delayed orders, and how much of it was organic?

Well, delayed orders -- we always have delayed orders. We're working on an order right now in this quarter that we thought was going to come in at the beginning of the year. So part of our business is -- unfortunately, it is a very, very long, difficult selling cycle, and delayed orders are a part of the deal.

But in terms of the full year, the orders, with the exception of some businesses out of China, all of the orders were generated in the current year. We do have some business in China that will continue as some LRADs are being placed on maritime security boats and they will continue into the next year, and we do run into some of those longer-term opportunities. But most of the orders, once they come in the door, they get shipped pretty quick.

Okay. That's helpful. And then can you give us an update on your progress in pursuing sales -- sales efforts in the mass notification market?

Well, as I indicated, we just hired two new employees who came out of this industry, and one is a very, very strong -- strong player. He has been a strong sales and marketing person in the space, and we are growing our business in Asia because Asia is basically a replacement opportunity. We are replacing existing speakers, and we are not required to put in any infrastructure.

So the mass notification space is much more complicated than just selling a speaker. There's all kinds of infrastructure that needs to be put in place, and, honestly, we're at the early stages of that. But we are pursuing it.

The speaker business in Asia, we are doing extremely well. And we just received an order today for Myanmar, Burma. Small order, startup order, but it will offer us some opportunity to grow in that area. We have had very good success in Japan, and we're starting to grow some mass notification business in China. So we feel very confident that we can get our speaker out as we develop more into a full-service turnkey solution.

Excellent. And perhaps looking out on next year, what growth rates would you be satisfied with? Something similar to this year? What kind of range can we expect?

You know, it is a difficult market. We are always targeting it to grow at a double-digit pace. And we fell down last year, and we came off of a significant year in 2011. We fell down last year, but picked it back up, strong fourth quarter, and as we head into the current year, yes, we would like to see us continue to grow at that double-digit pace. It is going to be difficult, but we are focused as an organization to try to do that.

And then I'm assuming operating margins will flow with the volume as well?

Yes. Yes, we're intent on trying to keep our operating margins in that 50% range. We have done it successfully for the last several years, and we feel like we can continue to do that. The mass notification space has a little tighter margins, but like I said, with bigger market opportunities, we can get our product costs in line to keep the margins in this area.

Great. And, lastly, if you could also give a little more color and provide us an update on the RFI with the Army and your Kongsberg program as well.

Those two programs, we are still very aggressively pursuing. As I indicated, we've picked up some new consulting support that has been very helpful in helping us find out where the programs stand and where they don't stand. We have had meetings with Kongsberg very recently, and we are continuing to pursue both opportunities. But, honestly, with the way that the defense budget or lack thereof and sequestration, it has made it very difficult to determine where these programs are.

We know that they are there. They haven't gone away. But the timing has been frustrating for us for the last three years. But we're not -- we are continuing to pursue them. We are not giving up because they're still out there.

All right. So nothing certain, obviously, but in your foresight, if you look into your crystal ball, you could expect something, perhaps, 2014/2015, or it is still just unknown at this part? Too early to tell? What do you take on that?

Yes, I would love to see something in 2014, but we may see something in 2014, but funding at the earliest would probably be 2015. But, as I said at the beginning of last year and I will say it again, we're focused on trying to build our international business, because we feel there are big opportunities in that area, and we will keep our growth going, and if these orders do materialize, that will just be an additional large revenue opportunity for the Company.

Excellent. That will do it for me. Thank you.

Jared Cohen.

One of the areas you mentioned it just before, but just the opportunity in the maritime area. Could you talk about that? It just seems like there is just a lot of talk recently about piracy and so forth.

Well, we continue to build our business in this space. As I indicated, we were awarded the $12.2 million ID/IQ contract from the U.S. Navy, and --.

I know you've always had it with the Navy, but I was thinking more on the commercial side.

Well, we are going after the commercial space, and that's been a big part of that increase in our business in China this past year. And we are working on a very large commercial opportunity in Asia right now, commercial maritimes, but we're still focused on trying to grow that business. We have just received some small -- we don't announce all of our small orders, but we received a small order from one of the large cruise lines. So there is still emphasis and focus on this, but it is still a very key part of our business.

We did announce an order recently that was booked this past quarter for units that were being put on workloads that are going off the coast of Nigeria for oil servicing vessels. So we're still focused on trying to grow that business, and it is still a key part of us.

I know, but just purely on the commercial side, how big -- I know it's probably not that big, but what percentage of your revenue, say over the last few years, has it been?

I would say probably less than 10%.

That's what I figured, and what would you say the opportunity is? I know it is probably huge given all the commercial ships out there, the thousands of them.

Yes, well, as I said before, Jared, the opportunity -- there is a lot of ships out there, but a lot of the ship owners don't like to spend any money. And when we do present them with our product, there is a lot of resistance because they don't like to spend much money for security.

And now, as we see, a lot of these vessels are starting to put armed guards on them, and that's a great opportunity for us. Because if you put an armed guard on a vessel, you're going to need to have an LRAD or some type of communication device before you shoot. Because if you are a private armed guard and you are shooting someone out on the ocean, that doesn't work so well.

So we see, as more of the armed guards get deployed, we see an opportunity to continue to expand our business in the space.

Okay. And, guess, lastly, same thing with I guess -- I know there won't be anything new -- but on the commercial airport side, particularly in the Far East, I know there is a bigger opportunity there than here in the United States.

Yes, we are working on an opportunity right now. It is not going to be significant, but it gives us another point where we can -- another success story that we can point to and, hopefully, continue to grow that business.

Jared, I think that that still has an awful lot of potential for us to grow, but it's slow in coming, and a lot of these airports are controlled by the governments and funding is a big issue, unfortunately. But we have made some progress in this area, and we have a good product and it works.

So we are continuing to pursue that area also.

Okay. Thank you very much.

[Lloyd Courtan].

Congratulations to you and your whole team. It's an amazing quarter, and thank you.

Thanks, Lloyd. Thank you.

You're welcome. I have a few questions, so will try to hit them quickly.

Recently, I think just last week, there were two shows in your area, one was a military show and one was another organization. Can you give us a little bit of idea of the reaction and how the shows went for us?

We were at the shows, Lloyd, and the feedback from the shows is always very positive. We put out a press release that we were going to be teamed -- at one of the shows, we are going to be teamed with Will-Burt. Will-Burt is a -- these guys make trailers and they make (multiple speakers), and we're working with them.

We have partnered up with them. Our product was on their trailer and placed on their mast, and, also, we are looking at purchasing some of the masts from them to put on our own trailer. But the feedback from those shows was very positive. We're up in Port Security Show right now up in Long Beach. That show ends today, and we have attended the show before. We have gotten a little bit of business out of it, so we continue to go to these shows where we have business opportunities.

I guess the products have gone through a big change, and I am just curious as to whether it is being appreciated by the people that are attending the shows. I have seen it, and they are a wow product. Do you get any of that reaction from some of these people? Is it (multiple speakers). Go ahead, I'm sorry.

Yes, we do. When we get it out in front of them, we get that reaction. When they look at it, they are trying to figure out what is that thing. But once they hear it, it is a different story.

Okay. I have a question. Basically business momentum has been on a positive side now for a little while, and you talked about stock buyback program. Now it is going to cost the Company more. Why haven't anything been executed?

Well, the good news is the Board of Directors sets the terms of the buyback, and the good news is our stock price has been increasing, and it was above the limits that we established with the investment bank that is doing the buyback for us. So we are looking at it. We feel like at this point in time we want to continue the buyback program, but we need to sit down with our Board and evaluate what that means as we go forward.

As I said, the buyback program runs through the end of the calendar year, and we are going to evaluate it. And my expectation is we will continue it, but we have to review that and get Board approval.

We have a 10 B-5 plan in place also. So while we're in blackout, which we have been, which seems like forever for our year-end, we will come out next week. But while we're in blackout, you can't change the terms of that plan either.

I understand. Thank you. Can you give us a little bit of Homeland Security? I know that we have done a little business with, I guess, through the National Guard or Homeland Security. How that is progressing and if we have been able to get any more states to purchase?

We're working that area, Lloyd. That is a focus for 2014. We have made some good inroads with the National Guard. We have gotten some small -- as I always say, small startup orders, but this is an area of focus. We are pursuing it.

We have gotten extremely good, positive feedback from the Colorado National Guard that used our product during the evacuation process with the floods that they had in Colorado, and they have become very strong supporters, and that word-of-mouth spread throughout the Guard very quickly.

So right now we're in a good spot to try to develop that business, and we are working it. But like any federal government, nothing happens very quickly, but we are positioned well, and we hope to see some business this year that is pretty significant from the Guard.

That will be very good. On China, I know that -- I heard that you're going to be going over there potentially or soon?

Next month, Lloyd.

Right. I see China as a tremendous area for growth, obviously. Can you give us any idea of expectations, or I see the business has increased dramatically and you haven't even -- I don't believe you have opened up the display yet or it is just opening now?

It was opened a little bit over a month ago. I am going over there for the grand opening. Yes, we expect to continue to see some pretty significant growth in China. As I've indicated in the past, the partner that we have is pretty well-positioned within inside the Chinese government, and we are expecting to be able to -- it is not going to happen overnight. Because it takes a while, again, to get inside of budgets, but we're pretty confident that we will see an increase over this past year's revenue and continue to grow it.

And they're making -- our partner is making some pretty significant investments in, not just in our product, but, also, in buildings and fixtures. So they have a very, very nice setup in Beijing, and that is where the Chinese government is located.

You increased about 5 times revenue a year ago. Do you expect --?

We did.

Do you have any growth expectations -- numbers?

Not 5 times, but I would like to see it continue to grow.

Right. Just one more question. Can you give us a little bit on the oil industry and the platform business? I know that you -- I believe there is a major oil company or two that you are involved with and what your expectations are there?

Yes, we have sold -- we have made sales in the past into Conoco and into Chevron. Right now we are working with a country oil company in Africa, and we are working on trying to get another order in from them this quarter. But that business -- our RX product is perfect for that type of a solution, whether you put on the boat that is servicing the platforms or you put it on the platforms to keep birds away or to keep pirates away.

So we are pursuing that. We have a couple of quotes out for some platforms off the coast of Venezuela, but we had those quotes out for a while so we are not so confident that we're going to see that. But we are still going after the space, and we do have a couple of reps that are focused on this area.

One more question about Brazil, with all that's going on there with the World Cup coming up in the Olympics, are we making any headway down there?

We are. And we have just recently sold some product into Brazil, small, but we are working to position ourselves to put product in place for the World Cup first, and for the Olympics we did sell product into London for the London Olympics. That went well. So we are looking to also capitalize on Brazil and also Russia. We are looking at the Winter Olympics in Russia, and they have gotten a lot of security issues. So we are trying to work that area also.

Thank you so much. Fantastic quarter. Appreciate all you are doing.

All right. Thanks, Lloyd.

Jonathan Manela.

I want to try to focus some of my questions on things looking forward. Happy to see you came in with a good quarter, but I want to focus on looking forward. It seems like there were a few key players that really could add significant value from a strategic perspective that came on to the Board. Haven't heard you mention it once. I am wondering, are you -- do you meet with these people? What is the relationship like? What is happening there? Could you give us a little color on that?

I would characterize the relationship as very good. We had a Board meeting yesterday. They are here in town. We have added -- fortunately, we have picked up two members on the Board who have a lot of background in this industry, and they have been very helpful.

As I indicated, Jonathan, we have some new consulting support, and, actually, some of that consulting support was introduced to us by one of the Board members. So I would say that the working relationship with the new Board is very positive. I have a meeting in Washington early December with the Board members, and we are talking about strategy and how we can get some further support from them.

So, actually, I would say you go through the process. It was not a pleasant process to go through, but I think that the ending place is very good. And these Board members are very supportive and understand that it is a lumpy, hard business, and dealing with the government takes a long time, but they have the background to help us out, and they have been looking -- reaching out to us to help us, and we're reaching back and trying to work with them.

Okay, good. I'm happy to hear that. So next question. I don't want to put words in your mouth, so part of what I hear you say and how I receive what you are saying, and if I'm hearing it and receiving it that way others might be as well, is going into 2014 and looking at business for this year and next year, you did $17 million in revenue. I kind of feel like if you came in next year at $19.5 million and then the following year at $22 million and then at $23 million, maybe it came back to $21 million, then went up to $24 million, that that would work for you. And I know from the seat that I'm sitting in, I would love to see the business grow from $17 million to $25 million to $40 million to $75 million to $100 million.

And I don't think it is going to happen. I am wondering what you think doing exactly what you're doing today. And you are sitting on a lot of cash. In four years, it doesn't seem that cash has ever been spent in a strategic way to spur growth, and I am just wondering is that -- is there a strategy to drive some growth that is either a little bit more visible or more meaningful? But don't let me put words in your mouth. I am curious to hear your thoughts on the beginning part of that statement as well.

Jonathan, we have grown our cash pretty significantly, but for the size of the organization, I wouldn't say that we are sitting on -- we are not like Microsoft or Apple, sitting on boatloads of cash. We have reinvested our cash in internal R&D, and we have reengineered the product line, probably two or three times over the last couple of years to try to stay ahead of the game and keep our business growing.

We are making some significant internal investments in this mass notification space, as I indicated. We see that as our biggest future potential because we have a product that is better than anything that is out on the market today. We are tiny. We are going up against some really big players that have been in this business for years, but we feel we can beat them with our product lineup. And of course, they are going to catch on to us and try to improve their own position, but they are large, slow-moving organizations, and we think we can beat them to the punch.

And we still have the big opportunities. Unfortunately, the US military has been -- we have got the work down of Iraq and Afghanistan, and we've got a US military that is maybe not so well supported by the administration, maybe you are supporting them, but the military is not being supported by them, and that has hurt us.

We expected to have very large business from the U.S. Army a couple of years ago, and that has hurt us. But we are still working it. We still we see the potential there, so that's not going away. We have looked at acquisitions that are out there, but we feel that by investing internally in this mass notification space, we have bigger opportunity and less risk.

So the future of the Company, yes, I would like to see this growth to a much larger extent. I'm not looking at growing it to $40 million next week, but we're trying to continue to grow this thing and get -- eventually get to a point where if you look at the structure of the organization, the bottom line will be very strong as we grow the top line.

Look at this quarter. We did $8.8 million in revenue, and we threw off $3 million at the bottom line. So I would like to see that topline growth. We're not sitting out here trying to keep the business down; we are trying to grow this thing.

All right. Good. I like to hear you -- I'm happy to hear you say that. (multiple speakers)

What benefit what I have to try to keep the business at a $20 million level?

No benefit. Absolutely none. Absolutely not at all. And, anyway, it sounds like there's a lot of good things happening. I'd like to continue to see good things happening.

Let me just bring up one other question here on this cash position and the stock and the purchase program. I know it something that has been mentioned twice on the call already. I don't know how many -- it is you and a few other guys. I have seen many boards be able to get a quick conference call going and make a quick vote. You guys are pretty nimble. You should be able to make changes as needed for the benefit of shareholders.

To say that we said something months back when we talked, and until we meet again, we can't really make changes, we're kind of stuck in that situation, anyone who knows better knows that that's just not true. So there has been opportunity over the course of the quarter to purchase stock. I think that goes a long way to show your level of confidence in the valuation of the business. The fact that it wasn't done, I think, does speak to some people, and I am just wondering is there a real desire here for you to consistently use some of the cash to buy stock? Whether it is at $1 -- let's hope we don't get back to that level where wherever you must have set. I know the stock over the quarter was trading at some point in the $1.30 range. There was no stock bought.

So I don't know how low you set this thing, but that bar feels low.

At the time that we put the buyback program in place, the Board agreed to set it at the market at that time, and then we had some announcements and the stock price has gone up. So the problem is that there is restrictions, Jonathan. We're in a blackout period, and we can't do anything in a blackout period.

We come out of the blackout period --.

When does the blackout period start? When did it end?

Mid-September, we went into blackout. It starts two weeks before the end of the quarter, and we come out of blackout two days after we file. So we will be out next week. So that's a long period that we are restricted from making any changes. (multiple speakers).

When did the buyback program get initiated?

We approved it in August, and it took a couple of weeks to set it up, and --.

I got you.

So the time there was pretty limited. So (multiple speakers)

I got you.

(multiple speakers) blackout we will have little more flexibility.

Jonathan, we were serious when we entered into the buyback program. We wanted to buy back shares, so we're serious. I expect us to continue to -- I have to get Board approval, but our recommendation as a management team is going to be, yes, let's extend this, and let's buy back some of these shares.

Right. If I could just give one man's opinion here, if you commit to buying a fixed amount of shares every quarter, you are going to -- that is going to go a tremendous way for the value of this -- the value of the stock and for shareholders. You have the cash to do it. You just got to do it.

Yes, we're not arguing. We did put in place, and we are looking at -- once we come out -- once we come out of this blackout period, we will speak to the Board. We have had some preliminary discussions, but nothing final, and we will look at getting approval to move forward.

All right. Thanks, Tom. Thanks for your time.

[Steve Allen].

Tom, I am new to the LRAD and a great quarter. A couple questions. Could you quantify the size of the mass notification market and who the competitors are?

Steve, there is a lot of different studies. A lot of people make money off of studies. There is a study that is out on mass notification. Going through it, the current global market is sized at about $2.4 billion, and the expectation from this study, and we see this -- I don't know that it is going to grow to the level that they indicate -- but they are estimating over the next five years that this should grow to about $6.4 billion globally. And with all these disasters that are occurring around the globe, there is more of a focus on putting in mass notification systems, and we have a system that is going to be mobile also. And we feel that that is going to be something that will have some traction.

But the big players, there's a lot of big players in the space. Federal Signal, Weyland, Siemens, there are some big companies out there that have footprints and a lot of installations. However, most of their systems have been siren-based, and the communications coming out of those systems are, I would say, less than intelligible, and we bring something to the table that is a little different.

We have a highly intelligible speaker that has tremendous range, and as a small player, it is going to be a rough climb, but we feel we have the opportunity to do it because we have a good product, and product usually wins.

Do you look at the mass notification market as a shift from the legacy LRAD or just a broadening of the market opportunities?

A broadening. We don't want to give up -- the LRAD business is still the core of our business, and it will remain the core of our business for a while. I think that eventually if we play this card right, eventually the mass notification could exceed the LRAD business, but right now we are the global leader in acoustic handling devices, and we're going to retain that. We're not giving that up.

And we have a team that is dedicated to continuing to enhance that product lineup and continuing to sell that product, but we're also bringing in some new players, some new engineers to focus on this mass notification space.

Are the leadtimes pretty much identical to the LRAD business, or are they shorter or longer?

I would say probably comparable. They are all long. Unfortunately, all of our leadtimes are very long.

Okay. Well, thank you very much.

[Miles Winstein].

Thank you. It has been answered already. Appreciate it.

There are no further questions at this time.

Okay. Well, go ahead, Brian.

Thank you, everyone. Thank you for participating in the conference call. A replay of the webcast will be available in approximately 2 hours through the link that was issued on the press release, and we will look forward to speaking to you soon. 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.