Another Significant SEPTA Contract Awarded to Gatekeeper Systems

The evolving relationship between Gatekeeper Systems (CA: GSI – $0.12 & US: GKPRF – $0.09 & GER: 1GK – €0.08) and the Southeastern Pennsylvania Transportation Authority (“SEPTA”) has taken another step forward, as this week Gatekeeper reported yet another contract has been received through its US subsidiary. The contract is to provide additional services to SEPTA valued at $2 million, which is an indication of the growing importance that has been placed on security and monitoring systems as part of the ongoing transit operations. Combined with previously reported contracts from SEPTA, this increases the total value of business secured with the Philadelphia-based transportation provider to over $7 million so far.

While the repeat business generated from this one client has been exceptional, what is more noteworthy is that Gatekeeper only made the strategic decision to acquire its US subsidiary in April of 2018. The transaction included a service and production facility along with a trained workforce that represents the foundation to enable the completion of contracts it has secured. It has also positioned the Company to achieve a much faster growth rate overall.

SEPTA multi-level train

Since April 2018, Gatekeeper has solidified SEPTA orders with an aggregate value of more than C$7 million.

Exceptional Return on Investment Achieved Through Acquisition of US Subsidiary

Another salient fact is that the acquisition of the US subsidiary was a bargain, but so far has generated a huge number of high margin revenues. A significant portion of the outstanding contracts with SEPTA, will be invoiced in the current fiscal year, ending August 31, 2019. The return on this investment for the US subsidiary is exceptional and will contribute to the trend of a stronger financial performance for Gatekeeper.

Gatekeeper has continued to build on the legacy relationship with SEPTA in this first year, while establishing the platform to attract other significant US clients as it gains traction in the marketplace. The obvious growth potential just within the transit operator subsector is attractive, and this has already been validated with the contract awarded to Gatekeeper last quarter with Jackson County Mass Transit District in Illinois. There will be many more opportunities to attract new clients as this technology is only just beginning to be recognized within the industry.

Gatekeeper is also well positioned to deliver growth in other sectors within the United States, such as with school bus operators and service contracts supporting military applications.

Most Advanced Products Presented at Important Conference

The growth objectives of the Company are supported by its technological developments that ensure Gatekeeper remains an industry leader with the most advanced monitoring systems available. For example, the Company has launched an improved on-board camera system with a high density crash memory module that is critical to ensure data may be recovered for analysis in the event of a collision. High definition video cameras with wireless communications have been developed to tie the systems to central monitoring centers in real time to improve efficiency, and this has led to a significant contract award from SEPTA.

A second commitment for the growth platform is the participation at industry conferences to market the products and services provided, and make contacts with decision makers that may become the next clients. Earlier this week, Gatekeeper attended the Transit Bus Summit held in Las Vegas, where the Company felt tremendous success when it presented its most advanced analytical solutions to potential clients.

The concept of the event is quite unique in that it enables direct meetings with senior representatives of transit operators. These are the Company’s main targets, making this a much more powerful marketing opportunity than a typical trade show.

Conclusion

With each additional contract awarded by SEPTA during recent months, the value of effective monitoring systems is communicated to the entire sector. In addition to the safety and operating advantages of these systems, SEPTA has estimated that it saves upwards of $22 million per year in expenses related to fraud and litigation.

The Company is now focused to springboard off this phenomenal success from its main client to build new sales in other regions. Participation at the Transit Bus Summit event provided the opportunity to present the technology of its monitoring systems, and discuss services with decision makers of major potential clients. Gatekeeper is focused towards establishing new business relationships and making inroads for its product line to improve the operations for other transit operators as it has demonstrated with SEPTA.

The order backlog already reported in the first couple of quarters since the establishment of the US subsidiary will keep Gatekeeper systems busy and generate important revenues at this early stage. However, the expansion in the relationship with SEPTA is also a validation of the effectiveness of the product line and there are many transit providers within the US market that are re-evaluating their own operations and considering implementing similar technology upgrades. Gatekeeper is on track to achieve a breakout year in 2019. Smallcaps recommendation: BUY.

Smallcaps.us Advice: BuyPrice Target: $0.28Latest Company Report (pdf)
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