Significant Transit Operator Tenders High Value Purchase Order for Gatekeeper Systems

Back in April 2018, Gatekeeper Systems (TSXV: GSI – $0.11 & OTC: GKPRF – $0.08 & Fra: 1GK – €0.07) announced it had acquired a beachhead into the United States market with its purchase of certain assets of Spector Logistics Inc. The deal was structured to establish a central facility in Wilmington, Delaware, for the newly created subsidiary Gatekeeper Systems USA Inc.

Also included in the acquisition was a contract with the Southeastern Pennsylvania Transportation Authority (SEPTA) worth approximately CDN $1.7 million to provide video system maintenance and support services of mobile video equipment on 2,400 of SEPTA’s 2,800 transit buses. Serving the greater Philadelphia area, SEPTA operates a vast fleet of buses, trolleys and trains.

The assets acquired furthermore include a production facility, workforce with technical expertise which expands gatekeeper’s capability in the train market, a command and control center in Wilmington designed to manage portable video installations for special events, crowd surveillance, and remote site-monitoring.

Important Growth Secured for US Operating Division

This week, Gatekeeper reported that its US division has won a new purchase order from SEPTA. The expected value of C$1.5 million from this deal will be for the purchase and installation of state-of-the-art video monitoring systems on part of SEPTA’s 970 passenger trains currently in service. The system is durable and supported by uninterruptable power supply with rugged crash-proof hard drives to store data generated from high definition cameras.

SEPTA has realized substantial savings in court hearings through the utilization of onboard monitoring systems. It demonstrates the value of these systems to protect both the passengers and the transit operators from unwarranted claims.

This follow through purchase order expands the relationship between Gatekeeper and SEPTA, and demonstrates that the latter has realized benefits of the video monitoring system already in operation for its bus fleet.

Moreover, this deal is a validation of the corporate strategy to expand into the US market, and it will be managed through the command and control center in Wilmington. The facility is fully staffed with trained specialists to complete the equipment installation for the trains, and work will begin shortly as soon as the specific ‘Statement of Work’ has been finalized by SEPTA.

Successful Results Reported by Client Improves Outlook for Future Sales

SEPTA has reported that video imaging captured on monitoring cameras has led to savings of more than $33 million in liability payments related to damages and injury claims from passengers on the buses. This substantial savings occurred just in the 2016 fiscal year.

As the 5th largest regional transit authority in the United States, with more than 300 million passenger trips each year, the positive results reported by SEPTA will be recognized by other public transportation agencies elsewhere in the country. This will make it much easier for Gatekeeper to achieve new sales contracts and grow the US division.

Conclusion

Gatekeeper’s strategy to establish a division to operate within the larger US market is already contributing solid results. The successful service relationship with one of the largest transit operators in the United States also presents a means to showcase Gatekeepers systems in operation.

That SEPTA has chosen to follow up with a secondary purchase of video monitoring systems to upgrade its train fleet can be regarded as a clear endorsement for the effectiveness of this technology, and an important step forward in the evolution for Gatekeeper Systems USA.

The purchase order announced this week will contribute meaningful revenues to the Company. In fact, this one order represents about 20% of last year’s total revenue. Gatekeeper Systems USA is actively pursuing other clients and advancing through the sales process. The potential for further breakthroughs with other transit operators is a logical outcome as the benefits of these onboard camera systems at SEPTA become apparent.

With core operating competency for both school bus operators and municipal transit authorities established, Gatekeeper is now ready to commence an aggressive sales campaign with an effective technology in a market that’s wide open with expansion opportunities. The increased magnitude of operations, plus the expectation for a rapid phase of revenue growth, will support a higher share price as the roll out for this technology continues. Recommendation: BUY.

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