LRAD Investor Presentation - ROTH, March 2018 · LRAD+100X LRAD+300X LRAD+450XL LRAD+500X LRAD+1000Xi LRAD+2000X ... Long Range Acoustic Device ... LRAD Corporation Balance Sheet

Confidential & Proprietary © 2011 LRAD Corporation All Rights Reserved

ROTH – March 2018

Investor Presentation

© 2018, LRAD CorporationConfidential and Proprietary

Disclosures

Forward-looking Statements: Except for historical information contained herein, thematters discussed are forward-looking statements within the meaning of Section 21Eof the Securities Exchange Act of 1934. You should not place undue reliance on thesestatements. We base these statements on particular assumptions that we have made inlight of our industry experience, the stage of product and market development as wellas our perception of historical trends, current market conditions, current economicdata, expected future developments and other factors that we believe are appropriateunder the circumstances. These statements involve risks and uncertainties that couldcause actual results to differ materially from those suggested in the forward-lookingstatements. These risks and uncertainties are identified and discussed in our filings withthe Securities and Exchange Commission. These forward-looking statements are basedon information and management's expectations as of the date hereof. Future resultsmay differ materially from our current expectations. For more information regardingother potential risks and uncertainties, see the "Risk Factors" section of the Company’sForm 10-K for the fiscal year ended September 30, 2017. LRAD Corporation disclaimsany intent or obligation to update those forward-looking statements, except asotherwise specifically stated.

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The Global Leader in Long Range Acoustic Devices, Advanced Mass Notification Systems, and Distributed Recipient Software Solutions

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72 Countries and over275 U.S. Cities, Counties and States use

LRAD Systems, Accessories and Support Equipment


Company Overview

Company§ Name & Ticker:

LRAD Corporation (NASDAQ: LRAD)§ 38+ Years of Communications Innovation§ Headquarters: San Diego, CA§ Share Price: $2.26 (as of January 23, 2018)

§ Market Capitalization: $73.2 million (as of January 23, 2018)

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The LRAD Advantage§ LRAD adds new dimensions to loudspeaker technology:

§ Controlled Sound Dispersion: 30° to 360°§ Industry Leading Voice Intelligibility§ Directional Transmission Ranges up to 5.5 Km. § Omnidirectional Mass Notification Transmission

Ranges up to 14 Sq. Km.


Industry Leading Directional Technology

Unlike conventional loudspeakers, bullhorns and vehicle P.A. systems that disperse sound in all directions, LRAD’s proprietary audio technology focuses sound in a 30° beam in front of its Long Range Acoustic Device®.

Conventional LoudspeakerSound disperses in all directions

LRAD®

Proprietary audio technology focuses sound in front of the device and significantly reduces audio levels behind the device and in surrounding areas

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Prevent Misunderstandings › Resolve Uncertain Situations › Designed To Save Lives


Directional Acoustic Hailing Devices (AHDs)

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Long Range Acoustic Devices

LRAD features • Advanced Driver and Waveguide Technology • Industry Leading Voice Intelligibility• Directional Broadcasts Out to 5,500 metersLRAD's Patented XL Driver Technology • Generates Nearly Twice the Audio Output in a Smaller,

Lighter Form Factor• Integrating Technology Throughout Product Line

LRAD 100X LRAD 300X LRAD 500X LRAD 1000Xi LRAD 2000XLRAD 450XL

Extended Range Communication• Ensures Communications are Clearly

Heard and Understood in Any Language

• Broadcasts Heard Over BackgroundNoise and Inside Vehicles and Buildings

• Focused Voice and Tone Broadcasts Where Needed

• Fills the Critical Gap Between Initial Engagement and Escalation of Force (EOF)

• Safe, Scalable, Non-Kinetic EOF

LRAD 1950XL


Remotely Operated, Directional AHDs

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Remotely Operated Securityand First Response Systems

• Robust full pan-and-tilt drive for maximum coverage• Remotely monitor and control functions through TCP/IP• Respond to threats from safe location• All weather use – Low power requirements• Hail, warn and communicate up to 3,000M • When integrated with high-intensity light, cameras and

radar, establishes a fully functional, automatedperimeter security and first response system

LRAD 1000RXLRAD 950RXLLRAD 500RX


Advanced Mass Notification Technology

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LRAD ONE VOICE® is Revolutionizing Mass NotificationIndustry Leading Voice Intelligibility with 60° - 360° Coverage up to 14 sq. km.

• LRAD Command & Control Software remotely activates and controls individual speakers or defined speaker groups through several system communication options

• Stream live or prerecorded voice messages

• Remotely monitor speaker health & status

• Mobile or permanent installations


ONE VOICE® 60° - 360° Systems

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§ LRAD ONE VOICE systems broadcast warning sirens and voice messages with unprecedented clarity and uniform 60° -360° coverage up to 14 sq. km. over towns, metro areas, campuses, bases and ports

§ Remotely monitored and activated by TCP/IP, fiber, Wi-Fi, digital or analog radio, Ethernet, hard wire or satellite

§ Self-contained or easily integrated with existing communications infrastructure

§ Temporarily or permanently mounted

LRAD Mass Notification – Advanced Technology / Superior IntelligibilityBased on Federal Emergency Management Agency (FEMA) and U.S. Military United Facilities Criteria (UFC) guidelines, the minimum standard for high-powered speaker array (HPSA) mass notification systems is a 0.5 Speech Transmission Index (STI), measured on a scale from 0.0 to 1.0

LRAD ONE VOICE systems have the highest STI in the mass notification industry at 0.95

Scalable LRAD 360XLRAD 360Xm DS-‐60XL LRAD 360XL-‐MID


LRAD ONE VOICE 360XT Mobile Mass Notification System

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360° Scalable CommunicationFully self-powered & self-contained

Does not rely on external power or infrastructure


Domestic & International Markets

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DefenseConvoy / Vessel / Base / Perimeter Security & Protection, Large Crowd Communications and Humanitarian Assistance & Disaster ResponseU.S. Defense Opportunities:• NAVY - Working under two multi-year IDIQs contracts with U.S. Navy• ARMY - Program of Record in place since 2015

- FY17 – Received $6.0 million order in September 2017- FY18 - RFP anticipated later this fiscal year for multi-year (FY18 – FY22) AHD program of 800 – 3,500 systems

• AIR FORCE – Received our largest U.S. Air Force order in December 2017

Successfully passed all Army / Navy qualifications and performance testingInternational Defense Opportunities:• New and follow-on orders from international military forces including

Armies, Navies and Coast Guards

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Law Enforcement & Public Safety

Officer Safety, Active Shooter Incidents, SWAT Operations, Serving High Risk Warrants, Hostage Negotiations, Search & Rescue Operations, Protests / Safe Crowd Dispersal, Large Outdoor Event Security & Communication

Law Enforcement & Public Safety Opportunities:• Recently announced several seven-figure Public Safety orders from

Southeast Asia and Asia Pacific region• LRADs are currently in use in over 275 U.S. cities, counties

and states• Working with Law Enforcement industry consultant to assist with

Federal grant funding for local, county and state agencies

“LRAD is a game changer for communication between the police andthe public. If we can effectively communicate…we reduce the chancesof anybody getting hurt.” – Sgt. J.E. Armstrong – Greensboro, NC PD

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Homeland, Border & Critical Infrastructure Security

LRAD turns passive surveillance systems into remote first responders, reduces manpower, and creates a permanent perimeter presence around borders and critical infrastructure facilities

Department of Homeland Security opportunities:• U.S. Borders / Ports of Entry• Responded to RFI for Technology• Completed two 60-day demos with Border Patrol• Completed comprehensive briefings with CBP leadership, all relevant

Congressional committees, and current and former Chiefs of US Border Patrol

• Working with three of the potential prime contractors to provide communication capabilities for various “wall” programs

Critical Infrastructure Protection:• Remotely operated LRAD installations at dams, power generation and

distribution facilities, and refineries• Additional opportunities for domestic

and international airports

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Maritime / Ports / Oil & GasNaval Vessels, Maritime Shipping, Cruise Lines and Yachts, Port Mass Notification & Security, Oil & Gas Platforms and Waterside Dock / Pier / Terminal Approaches

Maritime / Ports / Oil & Gas Highlights• Multiple LRAD systems on every U.S. Navy surface combatant

• Twenty-Four international Navies and Coast Guards have deployed LRAD systems

• Installed fully integrated security systems at major U.S. and international ports

• LRAD systems utilized on offshore oil & gas platforms to deter fishermen, boats and invasive wildlife

”We have to get…LRAD…Long Range Acoustic Device…”Captain Richard Phillips May 2009 Congressional Hearing on Maritime Piracy

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Wildlife Preservation & Asset Protection

Airport / Air Base Runways, UnmannedOil & Gas Platforms, Industrial Plants,Mining Operations, Wind / Solar Farms,Vineyards / Agriculture, Fisheries, LandfillsWildlife & Asset Protection Highlights• Deployed over 225 LRAD systems

at large oil sands operations in Canada - One site reduced bird deaths from over 1,000 annually to near zero

• LRAD systems installed at airports all over the globe, including Lebanon, Italy, Afghanistan, China, and the U.S.

• LRADs have safely eliminated sanitation and safety issues caused by roosting birds at a petrochemical facility

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Mass Notification / Emergency Warning

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Regional / Metro Areas / School, University & Business Campuses / Industrial Plants / Large Outdoor Events

Applications for Severe Weather, Tornado, Hurricane, Flooding, Wildfire, Tsunami & Earthquake Warning / Humanitarian Relief & Response

• LRAD ONE VOICE systems are being installed throughout Japan under a multi-year upgrade of country’s tsunami warning network

• LRAD Mobile Mass Notification systems integrated with chemical detection sensors recently placed throughout large Eurasian refinery

• Growth opportunities for mass notification business through broadening product and system portfolios, educating outdoor siren market, and expanding into indoor speaker, command and control software markets

LRAD ONE VOICE systems have the mass notification industry’s highest Speech Transmission Index measurement – 0.95 out of 1.00


Mass Notification - Genasys Acquisition

Genasys is a leading location-based mass messaging software solutions provider based in Madrid, Spain. Experienced development team with over 200 man years of software development and strong, international technical sales, service and support.Current Product Offerings -• news – SMS-based solution for sending public safety warnings and

notifications to individual cell phones of affected populations based on geolocation analysis

• haz – a workforce management application and solution for remotely monitoring employees, planning tasks, and managing workplace incidents

Total Acquisition Consideration - €3.1 million• €1.9 million purchase price• €1.2 million assumption of debtRevenues for Genasys in calendar 2017 (unaudited) were €1.9 million

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Mass Notification - Genasys Acquisition

Current customers include Network Providers, Public Administration, and Utilities

Delivers SMS-based Warnings & Notifications with Industry-Leading Speed • Small push notification companies can deliver 2,500 events per minute• Larger companies can deliver 50,000 events per minute• Genasys delivers 3,000 events per second – 180,000 events per minuteNationwide news Installation in Australia • news has been used to send more than 100 million messages with a 95%

success rate

Genasys Triples LRAD’s Addressable Market in MNS19


Balance Sheet Highlights

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($000's)2013 2014 2015 2016 2017

Cash & Cash Equivalents 15,805 23,895 18,316 13,467 12,804 Debt 0 0 0 0 0Working Capital 23,704 27,680 25,602 23,094 25,412

Fiscal Year Ended September 30

Balance Sheet Highlights(12/31/17)

Cash & Cash Equivalents (mm) $15.1Short-Term Mktbl. Sec. (mm) $ 3.6Long-Term Mktbl. Sec. (mm) $ 1.0Debt (mm) $ 0.0Working Capital (mm) $26.5


Five-Year Financial Summary

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2015 Net Income includes an Income Tax Benefit of $8,347. 2015 Net Income before Income Tax Benefit totaled $1,341. Net Margin before Income Tax Benefit equaled 8.0%.2016 Net Income includes $1,138 of non-recurring expenses associated with legal costs incurred in a settled proxy contest, severance and related expenses from the departure of the company’s prior Chief Executive Officer, recruiting and hiring costs related to the new CEO, and was partially offset by $186 Income Tax Benefit.

Increase in Fiscal 2017 Domestic Revenues Expected to

Accelerate in Fiscal 2018

Fiscal Year 2017 Revenues up 24%

2013 2014 2015 2016 2017Revenue 17,088 24,591 16,784 16,361 20,314 Net Income 1,263 3,327 9,688 (1,282) (877)

(5,000)

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Revenue & Net Income

2013 2014 2015 2016 2017International 9,906 19,151 12,593 10,214 13,034 United States 7,182 5,440 4,191 6,147 7,280

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Domestic vs. International Revenue


Five-Year Financial Summary

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2015 Net Income includes an Income Tax Benefit of $8,347. 2015 Net Income before Income Tax Benefit totaled $1,341. Net Margin before Income Tax Benefit equaled 8.0%.2016 Net Income includes $1,138 of non-recurring expenses associated with legal costs incurred in a settled proxy contest, severance and related expenses from the departure of the company’s prior Chief Executive Officer, recruiting and hiring costs related to the new CEO, and was partially offset by $186 Income Tax Benefit.

Mass Notification Revenues increase by 224%

FY17 Loss Associated with Investments in Personnel and Products for Future

Growth

2013 2014 2015 2016 2017Revenue 17,088 24,591 16,784 16,361 20,314 Net Income 1,263 3,327 9,688 (1,282) (877)Cash Flow from Ops. 1,756 8,403 136 (1,149) (667)

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Operating Cash Flow

2013 2014 2015 2016 2017LRAD 16,167 23,028 13,919 14,785 15,208 Mass Notification 921 1,563 2,865 1,576 5,106

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Revenue By Product Line


1Q18 Financial Highlights

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We include in this investor presentation Non-GAAP operational metrics of bookings and backlog, which we believe provide helpful information to investors with respect to evaluating theCompany’s performance. We consider bookings and backlog as leading indicators of future revenues and use these metrics to support production planning. Bookings is an internal,operational metric that measures the total dollarvalue of customer purchase orders executed in a period, regardless of the timing of the related revenue recognition. Backlog is a measureof purchase orders received that have not been shipped, but are planned to ship within the next 12 months.

§ 1Q18 Revenues increased 159% to $7.6 million§ AHD Revenues up 128%. MNS Revenues up 297%§ Revenues were up in all geographic regions

§ Gross Margins improved to 51.9% from 41.6%§ Gross Profit increased to $4.0 million from $1.2 million

§ Operating Profit totaled $1.0 million compared to a loss of $1.3 million in 1Q17

§ Recorded a $2.7 million non-cash tax charge for a reduction of the Deferred Tax Asset in conjunctions with the passage of the U.S. “Tax Cut and Jobs Act”

§ Led to a GAAP loss of 5 cents per share versus non-GAAP EPS of 3 cents per share

§ Bookings totaled $6.8 million, up 36%

§ Backlog at 12/31/17 was $11.4 million

§ Working Capital increased to $26.5 million


Institutional Ownership Summary

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Ownership As of 12/31/171

Shares of Common Stock Outstanding 32,236,039

Shares OwnedCompany (in millions) % OwnershipAWM Investment Company 4.0 12.4%Wellington Management 3.9 12.0%Manatuck Hill Partners 2.4 7.3%Iroquois Capital Management2 1.7 5.3%Royce & Associates 1.6 5.0%Blackrock Institutional Trust 1.2 3.9%Vanguard Group 0.9 2.9%

1. Ownership figures taken from 12/31/17 filings, except where mentioned.2. Per Form 13D/A as of 3/11/16.


Conclusion – Investment Highlights

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Value§ Global Brand Recognition - LRAD is the de facto standard for Acoustic Hailing Devices

§ NOL of $47.0 million Technology§ World Leader in Acoustic Hailing Devices§ Advanced Mass Notification Systems

Award Winning Products§ Government Security News and American Security Today awarded LRAD products Best Acoustic Hailing Device and Best Mass Notification System

Strong Balance Sheet (12/31/17)§ Cash - $15.1 million. § Short and Long-term Investments - $4.7 million

§ Working Capital - $26.5 million§ Debt - $0

Large Market Opportunities§ International – Increasing levels of global security needs driving LRAD product demand

§ Domestic – Improving outlook for Law Enforcement, Border Security and Defense funding

§ U.S. Military – FY17 Army Order $6.0 million -FY18 to FY22 Army RFP anticipated in FY18

§ Mass Notification – Substantial opportunities to replace ‘siren-only’ systems with LRAD ONE VOICE systems. Growing demand for new installations from critical infrastructure and industrial facilities

Other Highlights§ Bookings – A company record 28.4 million§ Backlog - $11.9 million at fiscal year end compared to $3.1 million at fiscal year end 2016

§ Recent acquisition of mass messaging provider Genasys S.L. triples addressable market in Mass Notification

© 2018, LRAD CorporationConfidential and Proprietary 26

Documents

LRAD Investor Presentation - ROTH, March 2018 · LRAD+100X LRAD+300X LRAD+450XL LRAD+500X LRAD+1000Xi LRAD+2000X ... Long Range Acoustic Device ... LRAD Corporation Balance Sheet