Ken Aubrey, CEO, said, “Our results reflect an uncertain economic environment in the United States and in portions of Europe, especially in the United Kingdom and southern Europe where governments are facing austerity measures. Revenue fell short of expectations in all our lines of business with the largest shortfalls experienced in our CitySync product line and in our Asian region. We had believed the general economic trend to be improving over the summer but it quickly softened. Additionally, our transition to new management leadership in Asia was slower than planned. Our overall product gross margins remain depressed due mostly to lower than anticipated volume and an unfavorable product mix in the quarter and to a lesser extent due to sporadic increased price competition.

“Although our near term outlook is unpredictable, we remain confident in the long range prospects for our portfolio of detection products and the growing demand for intelligent traffic systems, security, tolling and parking applications. One example of our optimism is our Hybrid product which is expected to launch in Q1 2012. The hardware is in final certification testing and we’re adding a second beta site. This combined video and radar product gives us the opportunity to significantly expand our market by accelerating the conversion from legacy loop detection to above ground detection. We estimate the annual loop market in North America to be at least double that of above ground detection, so even in a shrinking tax base environment we have an opportunity to tap a large market.

“In light of the current circumstances, we expect to execute on plans to reduce operating expenses to align them with an uncertain revenue outlook. We believe we are well capitalized and liquid with cash and investments of $7 million and net current assets of $22 million but it is management’s intent to return to improved profit levels urgently,” continued Mr. Aubrey.

Non-GAAP Information

We provide certain non-GAAP financial information as supplemental information to GAAP amounts. This non-GAAP information excludes the impact, net of tax, of amortizing the intangible assets from the 2007 EIS asset acquisition and the 2010 CitySync acquisition and may exclude other non-recurring items. Management believes that this presentation facilitates the comparison of our current operating results to historical operating results. Management uses this non-GAAP information to evaluate short-term and long-term operating trends in our core operations. Non-GAAP information is not prepared in accordance with GAAP and should not be considered a substitute for or an alternative to GAAP financial measures and may not be computed the same as similarly titled measures used by other companies.