Mr. Douglas Dyment reports

GATEKEEPER ACHIEVES 70% REVENUE AND 87% GROSS PROFIT INCREASE IN FOURTH QUARTER

Gatekeeper Systems Inc. has filed its financial statements and management's discussion and analysis for the fiscal year ended Aug. 31, 2015, available for viewing on SEDAR.

Fiscal year 2015 financial highlights:

• Revenue in the fourth quarter increased by 70 per cent and improved to $2,468,209 from $1,455,537 in third quarter;
• Revenues in fiscal 2015 increased 47 per cent and improved to $5,943,773 from $4,040,124 in fiscal 2014;
• Gross profit in the fourth quarter increased by 87 per cent and improved to $1,168,984 from $623,911 in third quarter;
• Gross margins in fiscal 2015 improved to 45 per cent, compared with 38 per cent in fiscal 2014, representing a 74-per-cent gross profit margin increase;
• At the end of the company's fiscal year, the company had cash and cash equivalents of $1,165,555, and working capital of $2,463,826;
• Completed equity financing, raising net proceeds of $3,016,295 in fiscal 2015;
• Net loss for the fiscal year 2015 was $920,796, compared with $1,665,364 during the fiscal year 2014.

Business update

The 47-per-cent increase in revenue was the result of the company executing on its business development strategies and momentum of its solid-state mobile video system, as well as introductory sales of its high-definition video systems. A key factor was the commitment, effort and dedication from employees and business partners located throughout North America. The company's continued sales success can be directly attributed to the close relationships that the company has built with end-users, dealers and system integrators.

The school bus market continues to be the company's main revenue generator with new sales coming from law enforcement, transit, general fleet vehicles and airborne defence. The company landed 14 new test sites for its stop-arm camera system with total combined buses owned by the 14 school districts of 919. This is up from two demo systems the previous year.

The company continued its contract with TIPS Interlocal Purchasing System which allows U.S. government buyers to procure Gatekeeper products without having to go through a lengthy competitive tendering process.

Market position

During the year, the following notable events occurred:

• Received approximately $535,000 in purchase orders for the company's new high-definition mobile video systems;
• Received new order for Viperfish airborne digital video recorders for AC130 gunships;
• Launched new body camera to law enforcement market;
• Signed new strategic reseller partner agreement with SunGard Public Sector Inc. Public safety and justice agencies use SunGard Public Sector solutions to manage emergency dispatch operations, citizen and incident records, mobile computing in the field, and operations of courts and jails. The agreement calls for Gatekeeper technology integration for SunGard customers;
• Received new purchase orders for its solid-state mobile video technology from multiple transit authorities totalling $160,000;
• Gatekeeper began the hiring process to increase sales and product development team to execute on 2015/2016 plan;
• Finalized testing with its leading transportation fleet with its forward-facing high-definition video system;
• Entered into non-disclosure agreement with leading telematics company to integrate the company's high-definition video system to offer unique product offering to one of Gatekeeper's biggest customers.

Product news

During the past year, the company made strides in product development, including the following:

• Completed development of high-definition products including five-, six- and 12-camera mobile video systems;
• Began development of body camera with built-in WiFi and GPS;
• Initiated development of high-definition airborne digital video system meeting military specification, including electronic magnetic interference;
• Launched new high-definition stop-arm camera system for recording licence plates in multiple lanes;
• Initiated design of high-definition forward-facing camera for in-car law enforcement market;
• Designed and launched four new high-definition mobile video cameras.

Moving ahead

The company continues to plan for expanding sales in multiple markets, including the transition of analog cameras to high-definition, stop-arm camera market and body cameras. To date, Gatekeeper has been working toward the following initiatives:

• Investigating a strategic expansion in the United States to support customers in current and new markets;
• Anticipation of generating recurring revenue from stop-arm camera projects as part of the Student Protector revenue-sharing program;
• Executing on its technology integration with SunGard with potential access to hundreds of new law enforcement customers;
• Aggressive integration strategy with leading software companies to create unique product solutions using the company's core products to increase market share.

Doug Dyment, president and chief executive officer, commented: "The company enjoyed a successful year increasing top-line growth while expanding its product lines and customer base in addition to exposure to capital markets in Canada, United States and Europe. We believe the work that has been completed this year sets the company up for future growth and profitability in the coming years. We appreciate the continued support of our customers, employees and shareholders."

                     CONSOLIDATED STATEMENT OF OPERATIONS

                                                 For the year ended Aug. 31,
                                                   2015                2014

Revenue                                 $     5,943,773    $      4,040,124
Cost of sales                           $     3,250,899    $      2,493,737
Gross profit                            $     2,692,874    $      1,546,387
Gross margin                                         45%                38%
Expenses                                $     3,740,182    $      3,242,825
Operating (loss)                        $    (1,047,308)   $     (1,696,438)
Net (loss) for the year                 $      (920,796)   $     (1,665,364)
(Loss)/earnings per share
Basic                                   $         (0.02)   $          (0.05)
Diluted                                 $         (0.02)   $          (0.05)
Total assets                            $     3,322,309    $      1,636,020
Total liabilities                       $       759,839    $        450,120
Total shareholders' equity              $     2,562,470    $      1,185,900

Financial reports

Full details of the financial reports and operating results for the fiscal year 2015 are described in the company's condensed interim consolidated financial statements with accompanying notes and related management's discussion and analysis. These documents and additional information on Gatekeeper are available on SEDAR.

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