Gatekeeper : Earnings Document

GATEKEEPER SYSTEMS INC.

Management's Discussion and Analysis

For the Nine Months Ended May 31, 2023

Third Quarter Report - May 31, 2023

(in Canadian dollars, except where noted)

GATEKEEPER SYSTEMS INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE NINE MONTHS ENDED MAY 31, 2023

General

This Management's Discussion and Analysis ("MD&A") has been prepared as of July 19, 2023, and should be read in conjunction with the Company's May 31, 2023 unaudited condensed interim consolidated financial statements with accompanying notes which have been prepared in accordance with IAS 34 Interim Financial Reporting, and the consolidated financial statements of Gatekeeper Systems Inc. ("Gatekeeper", "GSI" or the "Company") for the year ended August 31, 2022 and the related notes thereto, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All dollar figures are expressed in Canadian dollars unless otherwise stated.

This MD&A contains forward-looking statements that involve risks, uncertainties and assumptions, including statements regarding developments in the Company's operations in future periods, adequacy of financial resources, and future plans and objectives of the Company. Actual results could differ materially from those discussed in these forward- looking statements due to a number of factors. There can be no assurance that such information will prove to be accurate, and readers are cautioned not to place undue reliance on this forward-looking information.

These documents and additional information on the Company are available on the SEDAR website at www.sedar.com.

Cautionary Statement Regarding Forward-Looking Statements

This report includes forward-looking statements about our activities, events and developments that we expect to, or anticipate may occur in the future including, for example, statements about our business outlook, assessment of market conditions, strategies, future plans and future sales. Forward-looking statements normally contain words like believe, expect, anticipate, plan, intend, continue, estimate, may, will, should and similar expressions. Such statements are not guarantees of future performance. They are based on management's expectations and assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate in the circumstances.

We have based these statements on estimates and assumptions that we believed were reasonable when the statements were prepared. Our actual results could be substantially different because of the risks and uncertainties associated with our business. Important risks that could cause such differences include, but are not limited to, the length of sales cycles, rapid technological advancement, competition, the availability of critical inputs, foreign exchange rate occurrences and doing business in foreign countries. Additionally, differences could arise because of events that are announced or completed after the date of this report, including mergers, acquisitions, other business combinations and divestitures. Such risks, uncertainties and other factors include, among other things, those risks identified in the Company's Qualifying Transaction filed on SEDAR at www.sedar.com.

Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of the Company. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement.

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Third Quarter Report - May 31, 2023

(in Canadian dollars, except where noted)

Company History

Gatekeeper Systems Inc. (the "Company" or "Gatekeeper" or "we" or "our") was incorporated pursuant to the provisions of the Business Corporations Act (British Columbia) on August 26, 2010 and completed its initial public offering as a Capital Pool Company ("CPC") on January 7, 2011. As a CPC, the Company's only business had been to identify and evaluate businesses or assets with a view of completing a Qualifying Transaction.

On February 19, 2013, the Company completed the acquisition of all of the issued and outstanding shares of the private company, GSI Systems Inc., through a reverse takeover arrangement constituting its Qualifying Transaction under the applicable policies of the TSX Venture Exchange ("TSX-V"). On May 28, 2013, the Company changed its name to Gatekeeper Systems Inc. and its trading symbol on the TSX-V to "GSI".

On March 1, 2018, the Company formed a wholly owned subsidiary called Gatekeeper Systems USA Inc. (the "US Subsidiary").

Effective August 31, 2018, Gatekeeper Systems Inc. and its wholly owned subsidiary, GSI Systems Inc., combined by amalgamating into a single company, to carry on business under the name Gatekeeper Systems Inc. The amalgamation had no financial impact on its consolidated financial statements as the two entities have historically been consolidated for reporting purposes. From August 31, 2018 onward, Gatekeeper Systems Inc. is the operating entity and is being consolidated with its remaining wholly owned subsidiaries: Gatekeeper Systems USA Inc. and Deep Development Corp. Deep Development Corp. has no current or historical business activity.

Gatekeeper engineers, manufactures, and distributes industry leading high-definition mobile video and data solutions for a range of markets including school districts, law enforcement, public transit authorities, as well as the US military and Coast Guard.

Business Overview

Gatekeeper engineers, manufactures and distributes industry leading high-definition mobile video and data solutions for a range of markets including school districts, law enforcement, public transit authorities, as well as the US military. Over the past seven years, Gatekeeper has equipped school buses, transit buses and trains with over 100,000 video devices and approximately 47,000 intelligent mobile data collectors which form the foundation of the Company's Platform-as-a-Service ("PaaS") business model. The intelligent devices collect vehicle data such as video, audio, GPS, time, door open/close, and serve as the "black box" to aid in transit accident investigations. The PaaS units are WiFi enabled, mobile connected, or mobile enabled, allowing public transport assets to become part of the intelligent transportation solution in a Smart City ecosystem.

Gatekeeper offers mobile video solutions which integrate high-definition digital video (HDDV) with the Global Positioning System (GPS) for real-time vehicle location, time, date and telematics data, and provides a comprehensive 360-degree view inside and outside vehicles. Video evidence is recorded on a military standard digital recording system located inside the vehicle. High definition cameras operate in day or night conditions and are vital for collecting video evidence such as license plate details of vehicles illegally passing streetcars or school buses while passengers are loading or unloading. Gatekeeper's wireless devices also provide real-time connectivity, streaming video, and vehicle tracking.

Gatekeeper provides Artificial Intelligence (AI) solutions to support reliable video evidence collection and believes that AI is an important component within vehicle video safety and security. The Company's video management and video analytics software may be used in mobile or desktop applications for managing video evidence of incidents. Enterprise software can be used to stream live video from any vehicle, anywhere, anytime.

Gatekeeper's Canadian head office is the primary production facility and is located in Abbotsford, British Columbia. Product research and development, design, and engineering take place at the Abbotsford head office. Products are sold to end-user customers through Gatekeeper's direct sales staff, and also through a network of distributors and system integrators who have relationships with customers in multiple mobile markets. Gatekeeper is primarily focused on the North American market but has also pursued global distribution relationships outside of North America.

Gatekeeper operates its US Subsidiary in Bristol, Pennsylvania which is its service center for major transit customer the Southeastern Pennsylvania Transportation Authority and school customer the School District of Philadelphia. The US Subsidiary employs a team of service technicians and operates a mobile fleet of service vehicles, to provide on-

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site installation, service and support. In addition, Gatekeeper products destined for US customers are assembled in Bristol, Pennsylvania to comply with "Buy America" requirements and mitigate the impacts of US trade tariffs.

The US Subsidiary provides service solutions and has recently increased its service fleet vehicles to support growing business in the Philadelphia area. The US operation is a model that can be extrapolated to differentiate the Company and obtain greater market share.

School Segment

In 2021, the US Department of Education announced US$122 billion from the American Rescue Plan to help schools reopen safely and get students back in the classroom. The Company believes this funding package presents opportunity for additional business relating to technology on school buses, and the Company is pursuing these opportunities accordingly.

The Company's history has been anchored in the design and supply of video and data solutions for school buses that help protect school children while travelling to and from school. School Bus Fleet Magazine reports that approximately 480,000 school buses transport 22.6 million students daily in the United States alone. The Company has a full suite of video and data products designed to improve school bus safety, including:

Video Analytics Software - records time, location, audio, and video, enabling quick and easy assembly of video evidence needed to deal with school bus problems such as bullying, grazing, vaping, or verbal abuse.

Student Protector - records license plate information day or night, of vehicles that illegally pass a school bus when the stop arm is deployed. Gatekeeper's optional proprietary software also automates the ticketing process of stop-arm infractions.

Mobile Wi-Fi - provides 4G or 5G internet connectivity for students and authorized users while the bus is transporting students or while the bus is parked in a neighborhood for the purpose of providing internet access to students who do not have suitable connectivity at home.

360 Surround Vision Camera System - provides a surround view of the school bus and is automatically activated when the bus is reversing or making side turns. The surround view is displayed on a specialized rear-view mirror system allowing drivers to monitor school children all around the bus.

Interior Camera - records the video and audio activity on the bus interior using adjustable vandal-resistant cameras.

Tactical Ready Kit - is a portable unit that allows law enforcement personnel to obtain quick and easy display of the internal video and audio of a school bus in close proximity, even while in motion.

School bus safety is a growing concern due to the rise of vehicles illegally passing school buses while stopped. In the United States, The National Association of State Directors of Pupil Transportation Services (NASDPTS) conducts an annual survey of stop-arm violations. In a press release dated July 10, 2023, NASDPTS states: "In the survey, 94,581 school bus drivers reported that 62,482 vehicles passed their buses illegally on a single day during the 2022-2023 school year. Adjusting for 100% of the school bus drivers in the U.S., we would have seen just over 242,000 illegal passings. Projected across a 180-day school year, these sample results point to more than 43.5 million violations per year among America's motoring public. As the projected violations for the 2021-2022 school year were 41.8 million, we continue to see the problem of the illegal passing of stopped school buses increase. "

To address this concern the Company developed Student Protector which is an advanced video-based system for recording school bus stop-arm violations. The system includes digital recorders, up to 10-megapixel cameras for multi- lane high-speed license plate capture, GPS location, and wireless network compatibility for remote downloading. Student Protector utilizes AI and video analytics to automatically identify and record incidents and uses the Company's proprietary cloud-based application to provide automated video analysis and pre-formatted incident reports that can be used by enforcement agencies. Several states and provinces have recently authorized the use of video and photo evidence for issuing citations as a method to deter this dangerous practice.

The Company has also developed CLARITY an industry-first integrated video and school bus operating platform, which offers a solution to the logistics challenges created by the new era of hybrid schooling. CLARITY was developed in partnership with an established technology provider for school bus transportation who has developed software solutions for school bus scheduling and dispatch, school bus driver time and attendance, as well as driver communications. Their solutions have been embraced by a global leading transportation provider and under the partnership, Gatekeeper

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becomes their only video integration partner for the school bus market. CLARITY will also interface with Gatekeeper's on-board mobile data collectors and video devices on school buses to integrate additional data elements such as GPS location, passenger counting, and video analysis for social distancing. CLARITY provides school districts with the scheduling and on-bus video and data analysis tools they need to efficiently manage the logistics of their school bus operations.

During 2022, the Company developed Mobile WiFi to allow students and authorized users to connect their WiFi-enabled devices to the Internet when the school bus or vehicle is in motion or parked to provide a community Internet access point. The Mobile WiFi access point is mounted in the vehicle and is specially designed to operate in the extreme temperature range found on school buses. Mobile WiFi data is routed through the school's firewall and content filters to ensure a safe Internet experience for students. A report by Common Sense Media and the Boston Consulting Group shows that in the United States between 15 and 16 million K-12 school age children (approximately 30%) do not have access to adequate internet or devices to sustain effective distance learning at home. Of those, around 9 million have neither internet access nor devices.

High back seats on school buses are becoming increasingly popular for safety reasons and are mandated in many states in the US. This limits the view angles for traditional video systems, preventing adequate video capture of the passengers. Gatekeeper's high-definition wide angle dome cameras are designed to overcome this challenge and offer complete coverage inside the bus. Several school districts are therefore upgrading their buses with new digital video recorders as well as interior and exterior cameras.

School districts are embracing Gatekeeper's comprehensive suite of school bus video and data offerings for the complete fleet of school buses. For example, in August 2022, the Company announced a $1.2 million contract with an existing school district customer in Tennessee to upgrade its entire 390 school bus fleet to Gatekeeper's new suite of offerings. In November 2022, the Company announced a $1.9 million contract with an existing school district customer in Florida for a full-fleet upgrade. Gatekeeper has well-established relationships with school districts throughout North America and has installed approximately 47,000 wireless enabled intelligent mobile data collectors and more than 100,000 video devices on school buses for more than 3,500 school district customers.

Transit Segment

The Company designs, installs, and services intelligent video and data solutions for the transit industry. These solutions allow cities to improve passenger safety and operational efficiencies. Transit agencies throughout North America may consider enabling video enforcement solutions to enforce moving and parking violations in designated transit lanes in effort to keep buses on schedule. For example, in California on January 1, 2022, AB 917 became law and enables public transit operators state-wide to install automated forward-facing cameras on transit vehicles to enforce parking violations in bus lanes, and at designated transit stops.

In June 2021, the Company launched its AI-enabled Automated Lane Enforcement (ALE TM) solution which is designed to help cities reduce transit lane violations by automating the video evidence capture and processing vehicle infractions relating to bus lanes and streetcars. ALE uses video analytics and Artificial Intelligence to identify instances in which vehicles are violating transit lane traffic laws, including specialized applications such as vehicles that partially obstruct the bus lane, vehicles in the bus lane that signal a legal right-hand turn but illegally continue to drive straight, and vehicles that pass a streetcar when passengers are boarding or deboarding. ALE records the video evidence, captures the vehicle license plate, and prepares the instance for review and ticketing using the Company's proprietary Traffic Infraction Management System (TIMS) software. ALE builds on nearly a decade of experience within the Company using video analytics to identify, capture evidence and ticket vehicles that illegally pass stopped school buses.

The Company has been active in the transit industry since March 2018, when it acquired business assets of a mobile video surveillance service provider to the transit industry and the assignment of contracts relating to mobile video surveillance products, support, and maintenance to the Southeastern Pennsylvania Transportation Authority ("SEPTA"). SEPTA is the sixth largest public transportation system in the US with an average weekday ridership of approximately 1.1 million and is actively using vehicle video surveillance to evaluate and defend claims, monitor system safety and security, and protect against fraud. SEPTA has an installed base of more than 27,000 video cameras on vehicles and in stations.

The US Subsidiary provides annually recurring vehicle video system maintenance services for SEPTA's approximately 3,000 vehicles under a US$1.8 million annually recurring contract which was first announced in October 2019 for an initial three-year period plus two one-year extension options. In July 2022, the Company announced it was awarded the first of these two one-year extension options.

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