Actions Speak Louder Than Words – Gatekeeper CEO Buys 2.9 million Shares
Doug Dyment, the CEO of Gatekeeper Systems (CA:GSI – $0.21 & US:GKPRF – $0.14 & GER:1GK – €0.13), this week acquired no less than 2,916,667 common shares of Gatekeeper in a private transaction for an aggregate purchase price of $522,000 or approximately $0.179 per share. Talk about “putting your money where your mouth is”! This is an impressive move by the Company’s CEO to show his confidence in Gatekeeper’s future. It also sends a message that the CEO does not foresee any need to do a financing at this price level, which is not a surprise to us given that the Company has now turned profitable. There are many other places that CEOs can invest in this current market environment, so it is particularly impressive that Gatekeeper’s CEO views his own company as a compelling investment opportunity.
Mr. Dyment now owns or controls 9,830,792 shares, representing 11.07% of the issued and outstanding shares of Gatekeeper on a non-diluted basis, and 13.5% of the issued and outstanding shares on a partially diluted basis, assuming the exercise of the 2.5 million incentive stock options of the Company he owns.
We understand that Mr. Dyment purchased the shares from one of the initial investors of the company, who acquired them back in 2006 before the company became publicly traded.
Gatekeeper On Track For Outstanding 2020
Gatekeeper’s stock reacted positively to the share purchase announcement, rising to $0.23, a recent high. In fact, the stock has remarkably recovered its entire COVID-19 related loss. On March 20th, the stock dipped to $0.12 down from $0.19 two weeks prior. This quick recovery is a feat not many companies have been able to pull off.
Although it shouldn’t be a surprise in this case. First, Gatekeeper, in early April, reiterated that its business with the Southeastern Pennsylvania Transportation Authority (SEPTA) – the Company’s largest customer – would continue its normal operations. Already back then it was clear that Gatekeeper could come out of the entire COVID-19 situation relatively unscathed, as it could rely on a strong business model, smart planning and exceptional execution.
Also in April, the Company reported record second quarter revenue, gross profit, and net income for the three month period ended February 29, 2020. Revenue grew 32% from $2,698,819 in Q2 2019 to $3,574,643 in Q2 2020. Gross profit grew 41% from $1,142,129 in Q2 2019 to $1,614,468 in Q2 2020. And net income significantly improved from a net loss of $455,525 in Q2 2019 to a net profit of $90,551 in Q2 2020. Gatekeeper has recorded positive net income in three of the last four quarters with a narrow loss in Q1. Its net income for those last four quarters combines to be $856,000.
On top of that, the outlook for the Company remains outstanding. Gatekeeper’s Platform as a Service (PaaS) strategy provides its customers with multiple services from Mobile Artificial Intelligence (MAI™) for smart city applications to end to end high definition video and data management solutions. This strategy could gain the attention of other transit authorities throughout North America, especially given the fact that they have earned the trust of the 6th largest transit authority in North America. Moreover, even during COVID-19 isolation, Gatekeeper reported that it continued to take orders for the school bus market.
All in all, Gatekeeper presents a combination that is hard to find in the small cap investment space: growing financials, a solid balance sheet, a straightforward business plan that is being executed successfully, and a strong management team. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $0.69||Latest Company Report (pdf)|
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