Mr. Douglas Dyment reports

GATEKEEPER PROVIDES CORPORATE UPDATE FOR FOURTH FISCAL QUARTER

Gatekeeper Systems Inc. has provided an update to shareholders regarding recent developments within the company's fourth fiscal quarter ended Aug. 31, 2016.

The company's base business continued to drive sales in the fourth quarter with a record number of completed orders totalling approximately $4-million. The increase is primarily due to an increase in camera sales and mobile digital recorders of 65 per cent and 41 per cent, respectively, as compared with the same period in fiscal 2015. The company also increased its number of wireless systems shipped with its unique Autowake feature, shipping 197 systems during the fiscal year ended Aug. 31, 2015, as compared with 445 systems during the fiscal year ended Aug. 31, 2016, representing a 226-per-cent increase.

Stop-arm camera evaluation sites increased from 16 to 21 over the last quarter and involve approximately 1,500 buses owned by various school districts. Gatekeeper is in the process of working with school districts, law enforcement and judicial systems to complete the evaluation phase on these sites and progress to commercial implementation, ideally in the form of revenue-sharing arrangements.

The company executed on its first five-year revenue-sharing contract in the stop-arm camera business with Jones County School District in Georgia. Equipment was installed on schedule April 16 and April 17, 2016, with a press day held on April 27, 2016. Pursuant to the contract, Gatekeeper will receive 50 per cent of the revenue from each citation issued with 25 per cent shared with the school district and 25 per cent shared with Jones County. Stop-arm violation fines in Georgia are $350 (U.S.) for the first-time offence, $750 (U.S.) for the second-time offence and $1,000 (U.S.) for the third-time offence.

The company issued its first citation prior to school ending for summer break. There are an estimated 13 million to 15 million stop-arm violations in the United States with legislations now passed in 13 states that allow video enforcement technology to be used to issue citations.

During the fourth quarter, Gatekeeper continued product development activity, completing a number of new features in its base incident management software. In addition, the company finalized the design and commercialization plan for a multilane licence-plate-reading system for its stop-arm camera business.

Doug Dyment, president and chief executive officer, commented: "Our financial planning with new credit facility enabled us to complete approximately $4-million in orders in the fourth quarter which was a record for the company. Landing and executing these orders was a total team effort and I am very pleased to have reached a new high-water mark for sales activity. With approximately $800,000 in back orders leading into the first quarter of 2017, we are confident we are on track to execute on our sales and profitability goals for the coming year."