sc13d07042lra_06192015.htm

0001415889-15-002151.txt : 20150622 0001415889-15-002151.hdr.sgml : 20150622 20150622082704 ACCESSION NUMBER: 0001415889-15-002151 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20150622 DATE AS OF CHANGE: 20150622 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LRAD Corp CENTRAL INDEX KEY: 0000924383 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 870361799 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-81554 FILM NUMBER: 15943741 BUSINESS ADDRESS: STREET 1: 16990 GOLDENTOP RD., STE. A CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 858-676-1112 MAIL ADDRESS: STREET 1: 16990 GOLDENTOP RD., STE. A CITY: SAN DIEGO STATE: CA ZIP: 92127 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN TECHNOLOGY CORP /DE/ DATE OF NAME CHANGE: 19940602 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Iroquois Capital Management, LLC CENTRAL INDEX KEY: 0001481867 IRS NUMBER: 010786483 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 641 LEXINGTON AVENUE STREET 2: 26TH FLOOR CITY: NEW YORK, STATE: NY ZIP: 10022 BUSINESS PHONE: 212.974.3070 MAIL ADDRESS: STREET 1: 641 LEXINGTON AVENUE STREET 2: 26TH FLOOR CITY: NEW YORK, STATE: NY ZIP: 10022 SC 13D 1 sc13d07042lra_06192015.htm SCHEDULE 13D sc13d07042lra_06192015.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. )1

LRAD CORPORATION

(Name of Issuer)

Common Stock, par value $0.00001 per share

(Title of Class of Securities)

50213V109

(CUSIP Number)

JOSHUA SILVERMAN

IROQUOIS CAPITAL MANAGEMENT, LLC

205 East 42nd Street, 20th Floor

New York, New York 10017

(212) 974-3070

STEVE WOLOSKY, ESQ.

ANDREW FREEDMAN, ESQ.

OLSHAN FROME WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

June 22, 2015

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box x.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 50213V109

1	NAME OF REPORTING PERSON Iroquois Capital Management, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,699,607
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,699,607
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,699,607
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON IA

CUSIP NO. 50213V109

1	NAME OF REPORTING PERSON Iroquois Master Fund Ltd.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 1,699,607
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 1,699,607
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,699,607
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON CO

CUSIP NO. 50213V109

1	NAME OF REPORTING PERSON Joshua Silverman
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 21,147
	8	SHARED VOTING POWER 1,699,607
	9	SOLE DISPOSITIVE POWER 21,147
	10	SHARED DISPOSITIVE POWER 1,699,607
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,720,754
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON IN, HC

CUSIP NO. 50213V109

1	NAME OF REPORTING PERSON Richard Abbe
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 184,293
	8	SHARED VOTING POWER 1,699,607
	9	SOLE DISPOSITIVE POWER 184,293
	10	SHARED DISPOSITIVE POWER 1,699,607
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,883,900
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.6%
14	TYPE OF REPORTING PERSON IN, HC

CUSIP NO. 50213V109

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1.

Security and Issuer.

This statement relates to the Common Stock, par value $0.00001 per share (the “Shares”), of LRAD Corporation, a Delaware corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 16990 Goldentop Road, San Diego, California, 92127.

Item 2.

Identity and Background.

This statement is filed by:

(i)

Iroquois Capital Management LLC, a Delaware limited liability company (“Iroquois”), with respect to the Shares beneficially owned by it by virtue of its position as investment advisor to Iroquois Master Fund (as defined below);

(ii)

Iroquois Master Fund Ltd., a Cayman Islands exempted limited company (the “Iroquois Master Fund”), with respect to the Shares directly and beneficially owned by it and the Shares which are issuable upon exercise of the Warrants directly and beneficially owned by it;

(iii)

Joshua Silverman, with respect to the Shares he beneficially owns as a managing member of Iroquois and the Shares and Warrants directly and beneficially owned by him; and

(iv)

Richard Abbe, with respect to the Shares he beneficially owns as a managing member of Iroquois and the Shares and Warrants held by certain trusts or accounts established for the benefit of Richard Abbe’s children or other relatives (the “Accounts”) of which Richard Abbe serves as a custodian or trustee.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing and Solicitation Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

Note: the Reporting Persons previously reported on Schedule 13G with respect to the Issuer. The initial Schedule 13G was filed with the Securities and Exchange Commission on February 12, 2014 and was amended on February 17, 2015.

(b) The address of the principal office of each of the Reporting Persons is 205 East 42nd Street, 20th Floor, New York, New York 10017. The officers and directors of Iroquois Master Fund and their principal occupations and business addresses are set forth on Schedule A to the Schedule 13D and are incorporated by reference in this Item 2.

(c) The principal business of Iroquois is serving as an investment adviser that provides investment advisory services to Iroquois Master Fund. The principal business of Iroquois Master Fund is serving as a private investment fund. Iroquois Master Fund has been formed for the purpose of making equity investments and, on occasion, taking an active role in the management of portfolio companies in order to enhance shareholder value. The principal business of Messrs. Silverman and Abbe is serving as managing members of Iroquois.

(d) No Reporting Person, nor any person listed on Schedule A to the Schedule 13D, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

CUSIP NO. 50213V109

(e) No Reporting Person, nor any person listed on Schedule A to the Schedule 13D, has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Messrs. Silverman and Abbe are citizens of the United States of America. The citizenship of the persons listed on Schedule A to the Schedule 13D is set forth therein.

Item 3.

Source and Amount of Funds or Other Consideration.

The Shares and Warrants purchased by Iroquois Master Fund were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule B, which is incorporated by reference herein. The aggregate purchase price of the 1,310,841 Shares beneficially owned by Iroquois Master Fund and the warrants (the “Warrant”) to acquire 388,766 Shares was approximately $2,119,024, including brokerage commissions.

Mr. Silverman used his personal assets to purchase the 16,644 Shares and the Warrants to acquire 4,503 Shares reported herein. The total purchase price for such Shares and Warrants was approximately $23,675, including brokerage commissions.

The Accounts used working capital of such Accounts to acquire the 139,257 Shares and the Warrants to acquire 45,036 Shares reported herein. The total purchase price for such Shares and Warrants was approximately $191,498, including brokerage commissions.

Item 4.

Purpose of the Transaction.

The Reporting Persons purchased the Shares and the Warrants based on their belief that the Shares and Warrants, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

On June 22, 2015, Iroquois delivered a letter to the Board of Directors (the “Board”) of the Issuer. In the letter, Iroquois set forth concerns it has with certain of the Issuer’s recent actions, including (i) the Board’s failure to effectively manage the Issuer’s capital resources, including the excess cash on the balance sheet and the lack of share repurchases under the existing buyback plan and (ii) the Issuer’s failure to capitalize on available sales opportunities in emergency or general campus notifications and emergency warnings for natural disasters. The letter also notes that insiders of the Issuer have recently engaged in sales of Shares immediately upon exercise of options, which sends the wrong message to shareholders.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, continuing to engaging in communications with management and the Board of the Issuer, engaging in discussions with stockholders of the Issuer and others about the Issuer and the Reporting Persons’ investment, making proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including board composition) or operations of the Issuer, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, or changing their intention with respect to any and all matters referred to in Item 4.

CUSIP NO. 50213V109

Item 5.

Interest in Securities of the Issuer.

The aggregate percentage of Shares reported owned by each person named herein is based upon 33,558,565 Shares, which represents (1) the 33,120,260 Shares outstanding, as of May 1, 2015, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 7, 2015 plus (2) the 438,305 Shares issuable upon exercise of the Warrants.

Iroquois

(a)

As of the close of business on June 19, 2015, Iroquois beneficially owned 1,699,607 Shares, which includes (i) 1,310,841 Shares of Common Stock owned by Iroquois Master Fund and (ii) 388,766 Shares of Common Stock which are issuable upon exercise of the Warrants owned by Iroquois Master Fund.

Percentage: Approximately 5.1%

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 1,699,607

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 1,699,607

(c)

Iroquois has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares by Iroquois Master Fund during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

B.	Iroquois Master Fund

(a)

As of the close of business on June 19, 2015, Iroquois Master Fund directly and beneficially owned 1,699,607 Shares, which includes (i) 1,310,841 Shares of Common Stock and (ii) 388,766 Shares of Common Stock which are issuable upon exercise of the Warrants owned by Iroquois Master Fund.

Percentage: Approximately 5.1%

(b)

1. Sole power to vote or direct vote: 1,699,607

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 1,699,607

4. Shared power to dispose or direct the disposition: 0

(c)

The transactions in the Shares by Iroquois Master Fund during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

C.	Joshua Silverman

(a)

As of the close of business on June 19, 2015, Mr. Silverman beneficially owned 1,720,754 Shares, which includes (i) 1,699,607 Shares of Common Stock owned by Iroquois Master Fund, (ii) 16,644 Shares of Common Stock owned by Mr. Silverman and (iii) 4,503 Shares of Common Stock which are issuable upon exercise of the Warrants owned by Mr. Silverman.

Percentage: Approximately 5.1%

CUSIP NO. 50213V109

(b)

1. Sole power to vote or direct vote: 21,147

2. Shared power to vote or direct vote: 1,699,607

3. Sole power to dispose or direct the disposition: 21,147

4. Shared power to dispose or direct the disposition: 1,699,607

(c)

Mr. Silverman has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares by Iroquois Master Fund during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

D.	Richard Abbe

(a)

As of the close of business on June 19, 2015, Mr. Abbe beneficially owned 1,883,900 Shares, which includes (i) 1,699,607 Shares of Common Stock owned by Iroquois Master Fund, (ii) 139,257 Shares of Common Stock held in the Accounts and (iii) 45,036 Shares of Common Stock which are issuable upon exercise of the Warrants held in the Accounts.

Percentage: Approximately 5.6%

(b)

1. Sole power to vote or direct vote: 184,293

2. Shared power to vote or direct vote: 1,699,607

3. Sole power to dispose or direct the disposition: 184,293

4. Shared power to dispose or direct the disposition: 1,699,607

(c)

Mr. Abbe has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares by Iroquois Master Fund during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

Each Reporting Person, as a member of a “group” with the other Reporting Persons for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, may be deemed the beneficial owner of the Shares directly owned by the other Reporting Persons. Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On June 22, 2015 the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The Reporting Persons beneficially own certain Warrants to purchase a total of 438,305 Shares of Common Stock of the Issuer, as further described in Items 2-5 herein.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Item 7.

Material to be Filed as Exhibits.

99.1

Joint Filing Agreement by and among Iroquois Master Fund Ltd., Iroquois Capital Management LLC, Joshua Silverman and Richard Abbe, dated June 22, 2015.

99.2

Letter, dated June 22, 2015, from Iroquois Capital Management, LLC to the Board of Directors of LRAD Corporation

CUSIP NO. 50213V109

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: June 22, 2015

IROQUOIS MASTER FUND LTD.

IROQUOIS CAPITAL MANAGEMENT LLC



By:	/s/ Joshua Silverman
	Name:	Joshua Silverman
	Title:	Authorized Signatory

/s/ Joshua Silverman

JOSHUA SILVERMAN

/s/ Richard Abbe

RICHARD ABBE

CUSIP NO. 50213V109

SCHEDULE A

Directors of Iroquois Master Fund Ltd.

Name and Position	Present Principal Occupation	Business Address
Richard Abbe, Director	Hedge Fund Manager	205 East 42nd Street, 20th Floor, New York, New York 10017
Joshua Silverman, Director	Hedge Fund Manager	205 East 42nd Street, 20th Floor, New York, New York 10017
Scot Cohen, Director	Hedge Fund Manager	205 East 42nd Street, 20th Floor, New York, New York 10017

CUSIP NO. 50213V109

SCHEDULE B

Transactions in the Shares During the Past 60 Days

Securities

Purchased/(Sold)

Price Per

Share($)

Date of

Transaction

IROQUOIS MASTER FUND LTD.

(7,500)	$2.41	04/06/2015
(3,600)	$2.40	04/07/2015
(6,100)	$2.45	04/08/2015
300	$2.51	04/16/2015
(5,000)	$2.59	04/23/2015
8,522	$2.53	04/30/2015
(100,000)	$2.46	05/05/2015
2,000	$2.57	05/05/2015
(50,000)	$2.48	05/06/2015
5,400	$2.55	05/06/2015
(300)	$2.52	05/06/2015
3,100	$2.54	05/07/2015
1,000	$2.48	05/08/2015
1,500	$2.46	05/12/2015
(2,500)	$2.49	05/12/2015
(5,000)	$2.49	05/13/2015
(5,000)	$2.49	05/15/2015
(5,000)	$2.49	05/18/2015
1,100	$2.46	05/20/2015
500	$2.44	05/21/2015
2,100	$2.40	05/29/2015
(5,000)	$2.39	06/02/2015
(7,500)	$2.43	06/03/2015
(2,000)	$2.41	06/04/2015
(5,000)	$2.37	06/04/2015
(7,500)	$2.32	06/05/2015
(2,500)	$2.33	06/09/2015
(25,300)	$2.21	06/11/2015
(100)	$2.09	06/12/2015
(21,406)	$2.12	06/17/2015

EX-99.1 2 ex991to13d07042lra_06192015.htm JOINT FILING AGREEMENT ex991to13d07042lra_06192015.htm

Exhibit 99.1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including additional amendments thereto) with respect to the shares of Common Stock, par value $0.00001 per share, of LRAD Corporation, a Delaware corporation. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Dated: June 22, 2015

IROQUOIS MASTER FUND LTD.

IROQUOIS CAPITAL MANAGEMENT LLC



By:	/s/ Joshua Silverman
	Name:	Joshua Silverman
	Title:	Authorized Signatory

/s/ Joshua Silverman

JOSHUA SILVERMAN

/s/ Richard Abbe

RICHARD ABBE

EX-99.2 3 ex992to13d07042lra_06192015.htm LETTER TO THE BOARD OF DIRECTORS ex992to13d07042lra_06192015.htm

Exhibit 99.2

Iroquois Capital Management, LLC

205 East 42nd Street, 20th Floor

New York, NY 10017

June 22, 2015

LRAD Corporation

16990 Goldentop Road, Suite A

San Diego, CA 92127

Attn: Members of the Board of Directors

Dear Board Members,

Iroquois Capital Management, LLC (“Iroquois Capital”, “we” or “us”) manages investment funds that, together with its affiliates, collectively own approximately 5.7% of the outstanding common stock (including shares underlying certain warrants) of LRAD Corporation (“LRAD” or the “Company”), making us one of the Company’s largest unaffiliated shareholders. We are long-term value investors in the Company, having held shares of LRAD since 2005, and have a vested interest in seeing LRAD capitalize on all opportunities that may exist to create significant value for shareholders

In 2013 we worked closely with LRAD to reconstitute and enhance the board of directors (the “Board”) by replacing two of its then-current directors. Shortly thereafter, in early 2014, we transitioned to a passive Schedule 13G filing at LRAD, confident that with a reconfigured board, the Company would be well-positioned to steer itself in the right direction and create shareholder value. In fact, the stock proceeded to double in short form following the momentum of these important structural changes. To that end, we are especially pleased that General John G. Coburn, one of our recommended directors, has proven effective in utilizing his vast experience and network around the globe to expand LRAD’s international footprint, particularly in the Far East. As a result, the Company’s revenue from international business has been growing substantially.

Recently, however, with LRAD’s share price down over 20% year-to-date while the Russell Microcap Growth Index is up 28%, we have become increasingly concerned that management and the Board may not be acting with a proper sense of urgency in terms of capitalizing on available opportunities to enhance shareholder value. Specifically, our concerns include (i) the Board’s failure to effectively manage the Company’s capital resources, including the excess cash on the balance sheet and the lack of share repurchases under the existing buyback plan, and (ii) the Company’s failure to capitalize on available sales opportunities in emergency or general campus notifications, emergency warnings for natural disasters and even the recent shark attacks in North Carolina. We also note that insiders, including the CEO and CFO, have recently engaged in sales of LRAD shares immediately upon the exercise of options sending the wrong message to shareholders. In light of these concerns, we have converted our Schedule 13G back to a Schedule 13D so that we may be able to more actively engage with the Company and shareholders regarding these concerns and the most effective manner for addressing them.

The Board has Failed to Properly Manage the Company’s Capital Resources

The LRAD Board is tasked with the responsibility of acting as a steward of shareholder value. LRAD has excess cash on its balance sheet and, we believe, should take immediate steps to return this capital to its shareholders through either a substantial increase in its share repurchases under the Company’s share buyback program or through a significant one-time dividend and a continuing dividend program.

According to its most recent Quarterly Report on Form 10-Q, as of March 31, 2015, LRAD had over $23 million in cash and marketable securities on its balance sheet, which represents nearly two-thirds of total assets and over one-third of the Company’s market capitalization. What is the reason for holding this much of the Company’s capital in cash? Often companies with excess cash reserves take steps to return capital to shareholders. We believe that without some compelling strategy to deploy such cash, the best approach for the Company is to return it to shareholders.

The Company already has a share buyback program, which it adopted in mid-2013 and which expires on December 31, 2015. Under the buyback program, as amended, the Company has been authorized to repurchase up to $4 million of the Company’s outstanding common shares. According to its public filings, the Company repurchased no shares in fiscal 2013, 277,157 shares for $516,352 (an average of $1.86/share) in fiscal 2014 and an additional 69,213 shares for $158,740 (an average of $2.29/share) in the first half of fiscal 2015. This amounts to share repurchases to date of $675,092, or just 17% of what has been authorized. How can a share buyback program increase shareholder value if it is not being properly utilized? We strongly urge the Board to increase the amount of share repurchases under the program or issue a large, one-time cash dividend to shareholders.

The Company has Failed to Take Advantage of Readily Available Business Opportunities

Another concern is the apparent failure by the Company to capitalize on potentially significant business opportunities, particularly in areas in which the Company could realize substantial growth. Given the highly-publicized nature of many events for which LRAD’s products are typically utilized, there is no excuse in our mind that the Company has failed to recognize and capitalize on these growth opportunities.

The Company launched its omnidirectional product line in 2012 in order to expand into the mass notification market, which the Company views as substantial in size and growing. LRAD has stated that it has “added selling resources to focus on this market,” however, it has missed rather obvious potential sales opportunities. For example, the Company has not built a sales and marketing infrastructure to take advantage of opportunities in emergency or general campus notifications at schools and universities. In light of the recent increase in campus shootings LRAD is well-positioned to provide public and private education institutions with LRAD’s state-of-the-art emergency notification products. LRAD has also missed sales opportunities with respect to emergency warnings for natural disasters.

Ultimately, we believe management needs to do a better job at recognizing potential sources of demand for both its directional and omnidirectional product lines and be prepared to expand into new or underdeveloped markets. The Company should develop its sales and marketing capabilities in these areas to be able to more effectively capture these growth opportunities.

Concerns with Insider Sales of LRAD Stock

In addition to repurchasing a very limited number of what has been authorized under the Company’s share buyback program, we are concerned with the significant selling of LRAD shares by certain insiders. According to their insider filings, the Company’s Chief Executive Officer, Thomas R. Brown and Chief Financial Officer, Katherine H. McDermott, have been exercising their options and immediately selling large amounts of stock at a substantial profit. Mrs. McDermott’s sales are particularly disconcerting given her particularly generous compensation package coupled with the fact that she sold each and every share she exercised.

What’s more, the prices at which these insiders are selling the shares are often higher than the prices at which the Company has offered to repurchase its own shares from LRAD shareholders. Ms. McDermott on the Q1 2015 earnings call essentially admitted that the stock price has been too high for the Company to engage in share repurchases in the first quarter, stating:

“We didn’t have any repurchases in the first quarter. Based on where our stock price has been, it’s been up pretty high at this point so its still – the program is still active through the end of the calendar year. So, depending on the price, if the prices are at a reasonable level, we will do future repurchases, but there weren’t any in the first quarter.”

It appears that LRAD management and the Board will not engage in share repurchases unless it can acquire the shares at a discount, however, when it comes to their own shares, the CEO and CFO are happy to exercise options and sell their shares regardless of the price.

At a time when the Company has excess cash reserves and is conducting its own share buyback program, why are these executives selling their stock in such high numbers? These actions are in contrast to what the Company is attempting to accomplish through the share buyback program.

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In light of all of the above concerns, we remain very excited about the prospects of the Company and open to discussing the best ways in which we can constructively work together with the LRAD Board to take advantage of the available opportunities for the Company to create value for the benefit of shareholders.

	Best Regards,

	/s/ Richard Abbe

	Richard Abbe
	Managing Member