If you are new to the world of microcap investing, you want to start with companies that are low risk but still offer significant capital gain potential. You want a well established, high growth business model, blue chip quality management, a clean balance sheet, and a very low (below radar) valuation.
Companies like this are difficult to find, but not impossible. And Gatekeeper is one such microcap that we follow through MicroCap.com that should be worth researching further for investors new to microcap investing.
Gatekeeper Systems (GSI:TSXV 10 cents / GKPRF:OTC)
Shares Outstanding: 88 Million / Market Cap: $9 Million
Minimal Debt with Net Cash & Receivables near $6.5 million
Annual Revenue for 2017: Approx. $7 Million (small loss $330k)
Total Safety, Security and Management Solutions for Mobile Markets
Gatekeeper lacks “sex-appeal” but with a strong balance sheet and attractive growth potential for 2018/19, this is a fundamentally solid speculation in the tech industry.
If we pull out the cash, the business itself is being valued by the market at only $2.5 million. This is ridiculously low as a clean shell (a tiny publicly traded company with minimal assets looking for a business to acquire) on the TSXV is selling for $1 million.
Marginally profitable microcap tech companies with decent revenue should be worth (as a minimum) 1 to 2 time’s annual revenue (if they have a clean balance sheet and innovative technology). Under that valuation scenario, Gatekeeper should be worth $8 to $16 million ABOVE net cash value. Meaning, fair value on GSI should be in the range of 17 to 26 cents. This assumes little to no growth (which is unlikely during 2018/19).
Gatekeeper has approximately 100,000 cameras installed on school and transit buses throughout North America and has expanded its business to include customers such as the U.S. Air Force, defense contractors and law enforcement agencies. It serves more than 3,500 customers, in every province and state across North America.
“Gatekeeper provides innovative, end-to-end video safety and security solutions for mobile applications including body cameras, in-car police video systems, school bus video and stop-arm camera video enforcement systems, transit bus video systems, and airborne digital recording systems for military applications.”
“Gatekeeper provides scalable, end-to-end, hi-definition safety and security solutions for mobile applications in school buses, transit buses, police vehicles, transport vehicles, military aircraft, coast guard patrol vessels, and on law enforcement officers. The integrated, high-resolution video, voice and mapping for extreme mobile applications provide customers with an effective tool to increase passenger safety, protect drivers, and manage fleet operations.”
“The products provide a 360-degree view inside and outside vehicles. Each system integrates hi-definition video with GPS location technology for real time vehicle location, along with time, date and telematics data. All data is recorded to a military standard digital recording system, located inside the vehicle. Cameras transmit hi-definition video, in day or night conditions, collecting evidence that includes license plate information of stop arm violators. Gatekeeper wireless devices provide real time connectivity, streaming video, and vehicle tracking.”
The global video surveillance market is expected to reach US $63.2 billion by 2022. The emergence of video analytics, cloud-based services for centralized data, the prevalence of hi-definition cameras, and the increasing need for physical security are all major factors fueling growth in the security and surveillance markets.
The increasing demand for Video Content Analytics (VCA) and Video Surveillance as a Service (VSaaS), incorporation of artificial intelligence in video surveillance systems, increasing demand for intelligent transportation systems, and integration of surveillance with technologies have been identified as the key opportunities expected to accelerate market growth in the coming years.
- Synchronize real time video, GPS, voice and vehicle sensors
- Easy to use incident management and fleet tracking software
- Intelligent live streaming and remote monitoring
- High Speed Mobile License Plate Readers and TIMTM (Ticket Infraction Management) Software System
- High Definition Body Worn Camera and Evidence Management Software
Blue Chip Board Members / Advisors Include:
1) Charlie Bruce (Nov/17) – former chief operating officer of both First Group America and National Express Corp., two of the largest companies providing school transportation services in North America and Europe. First Group is a school transportation service provider serving more than four million students in 42 states and Canada, with 80,000 plus employees, 50,000 plus buses and annual revenues in excess of $2.5-billion.
National Express Corp. is a school transportation provider operating in 34 states and four Canadian provinces, with 22,000 employees, 20,000 plus buses and annual revenues of nearly $1-billion. As COO, Mr. Bruce oversaw $1-billion student transportation operations from 300 North American locations. He had full P&L responsibility through a leadership team that includes five vice-presidents of operations and 14 region managers.
Mr. Bruce founded Transportation Advisory Group (TAG) in 2015 and is the president and chief executive officer providing advisory services to the student transportation industry.
2) David Stumpo (Nov/17) – 40 years of experience within the public transit industry. He is the founder and current CEO of the American Public Transit Exams Institute (APTREX) and executive director for the Southern California Regional Transit Training Consortium (SCRTTC).
Mr. Stumpo’s other relevant experience includes the following:
Coast Mountain Bus Company (formally B.C. Transit), 1999 to 2002: president/CEO of the Coast Mountain Bus Company in Vancouver, managing a $300-million operating budget, $1-billion of capital assets, including 1,600 vehicles and 3,800 personnel;
San Francisco Municipal Railway (Muni), 1995 to 1999: deputy director of maintenance and chief operating officer for the San Francisco Muni, with an annual budget of $280-million, including 1,400 vehicles, and all maintenance and operations of bus, light rail, cable car and trolley bus, facility maintenance, signal, track, subway, and power/overhead divisions.
In March 2018 Gatekeeper established Delaware based Gatekeeper Systems USA. The division was created to expand sales and service in the United States and to meet Buy America regulations. Then on April 9th they announced a small, but important, U.S. acquisition ($1.7 Million).
They acquired certain assets of Delaware based Spector Logistics. The assets acquired include a production facility, work force with technical expertise which expands the company’s capability in the train market, a command and control centre in Wilmington designed to manage portable video installations for special events, crowd surveillance and remote site-monitoring.
Gatekeeper USA also acquired Spector’s contracts with the Southeastern Pennsylvania Transportation Authority, which are expected to generate approximately $1.7-million in revenue through the provision of video system maintenance and support services of mobile video equipment on 2,400 of SEPTA’s 2,800 transit buses as well as to supply and install cameras, uninterruptable power supplies and crashworthy hard drives on selected Philadelphia trains.
SEPTA is a regional public transportation authority that operates bus, subway/elevated commuter rail lines, commuter and light rail, and electric trolleybus services to nearly four million people in five counties in and around Philadelphia, Pa. SEPTA is the United States’ sixth largest rapid transit system by ridership and is ranked as the fifth largest with about 306.9 million annual unlinked trips. It operates 290 active stations, more than 450 miles (720 kilometres) of track, 2,295 revenue-generating vehicles and 196 routes.
In 2017, the National Association of State Directors and Pupil Transportation Services (NASDPTS) tested the number of stop arm violations occurring in a single day throughout 31 States, resulting in an estimated 14 million stop arm violations in 2017.
APRIL CORPORATE PRESENTATION
Douglas Dyment, President & CEO
Danny Deadlock and no person or company he is affiliated with has received compensation in any form (either directly or indirectly) for preparation or distribution of this report. No one from Gatekeeper Systems (including officers and directors) is associated with distribution of this report. It has been prepared independent of Gatekeeper Systems.
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