Autoscope Technologies Corporation ($AATC)

Good morning. This is a call to order for the 2026 Annual Meeting of Shareholders of Autoscope Technologies Corporation. I am Andrew Berger, the Executive Chairman of the company, and I welcome all of you. I'd first like to introduce the officers, directors and management employees of Autoscope who are present today. The directors attending are Jim Bracke, Joe Daly, Zeke Kruglick, Brian VanDerBosch; and me and the management employees of Autoscope in attendance are Andrew Markese, our CEO; and Lori Schug, our CFO. We also have present a representative from our auditor, Boulay PLLP as well as Vince Pecora from Winthrop & Weinstine, our outside legal counsel. I will next turn over the meeting to Lori Schug, who will act as our Secretary of the meeting and will preside over the formal portion of the meeting, during which the shareholders will vote on the proposals to be acted upon at the meeting. After the conclusion of the shareholder business for this meeting, Andrew Markese will provide an update on the company's business. Lori?

Thanks, Andrew. Good morning, everyone. First, I would like to provide a disclaimer on forward-looking statements used during this meeting. Statements made by representatives of the company during this meeting, including the presentation that follows the conclusion of the formal part of this meeting may contain forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Words such as anticipates, expects, intends, goals, plans, believes, seeks, estimates, continues, may, will, would, should, could and variations of such words and similar expressions are intended to identify such forward-looking statements. All statements that we make or incorporate by reference in the presentation other than statements or characterizations of historical fact are forward-looking statements and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. It should be clearly understood that these forward-looking statements and our assumptions about the factors that influence them are based on information available to management at the date of this presentation unless an earlier date is indicated. Such information is subject to change, and we may not inform you when changes occur. We undertake no obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances. Additional information on Autoscope Technologies Corporation, including risk factors and uncertainties that may affect our forward-looking statements is contained in our annual report for 2025 and our other filings that are available through the OTC Markets website at www.otcmarkets.com and in the Financials section of our website at www.autoscope.com. Before we start the official part of the meeting, if you have any questions now or at any point during the meeting and today's presentation, please type your question in the questions box and click submit. We will follow up with a response after this meeting. Now for the official part of the meeting. As provided in the proxy statement for this virtual meeting, shareholders may vote at the meeting over the Internet. The polls for this meeting are now open, so any shareholder who wants to vote at this meeting and has not yet done so should do so now before the polls close by e-mailing [email protected] and submitting their proxy. If you have already voted by proxy, you don't need to vote today unless you would like to change your vote. Autoscope's bylaws provide that every shareholder of record or his or her legal representative as of the record date is entitled at this meeting to 1 vote for each share of common stock standing in his or her name on Autoscope's books. The Board of Directors has set February 16, 2026, as the record date for this meeting. Our records indicate that as of that date, there were 5,505,422 shares outstanding. The record of this meeting should reflect that a notice of Internet availability of proxy materials, a notice of this meeting, a proxy statement and a proxy were filed with the OTCQX on March 13, 2026, and as applicable, mailed beginning on or about March 13, 2026, to the shareholders of Autoscope entitled to vote at this meeting. A copy of the notice, proxy statement and proxy will be made a permanent part of our records. Quorum requirements are that at least 2,752,712 shares must be represented at this meeting, either by shareholders present during the meeting or by proxies on file with Autoscope. As of the close of business on April 15, 2026, a quorum has been reached. Therefore, as Autoscope Secretary, I certify that a quorum is present for this meeting. Now that shareholders have had the opportunity to vote, I hereby declare the polls closed. The first proposal is the election of 5 directors. The Board of Directors has nominated the following persons, all of whom are currently serving as directors of Autoscope: Andrew T. Berger; James W. Bracke; Joseph P. Daly; Ezekiel J. Kruglick, Brian J. VanDerBosch. Under applicable regulations, brokers and other intermediaries are generally required to vote the shares in the manner directed by their customers. They have discretion to vote their customer shares on a limited number of routine matters, but they cannot vote for the election of directors and other nonroutine matters on a discretionary basis. This may have the effect of lowering the number of votes for each of the candidates and these other nondiscretionary matters. Based on the number of votes that have been cast by proxy and any votes cast at this meeting, all of the nominees have been elected as directors. The precise voting results will be posted to our website and to the OTC Markets website. The second and final proposal is for the ratification of the appointment by the Audit Committee of the Board of Directors of Boulay PLLP as the independent registered public accounting firm for Autoscope for the year ending December 31, 2026. This is the only matter on which brokers may use their discretion to vote shares on behalf of a beneficial owner without express instructions from the shareholder. Based on the number of votes that have been cast by proxy and any votes cast at this meeting, the appointment of Boulay PLLP has been ratified. The precise voting results will be posted to our website and to the OTC Markets website. Thank you for voting and approving the proposals. The formal meeting is now adjourned. The following discussion will cover key financial performance metrics for the 2 most recently reported years ended December 31, 2025 and 2024. Image Sensing Systems, Inc., or ISNS, which is a wholly owned subsidiary of Autoscope is a global company dedicated to providing above-ground detection technology products for advanced traffic management systems, traffic data collection applications and data-driven strategies for the Intelligent Transportation Systems or ITS sector. ISNS has pioneered the use of the most advanced detection algorithms in the industry, incorporating artificial intelligence or AI and machine learning into its video image processing for vehicle and pedestrian detection. The company's flagship Autoscope Video detection provides highly accurate and reliable intersection, wrong-way detection and transportation data insight solutions. By harnessing AI-driven sensor analysis, Autoscope technology delivers dynamic real-time traffic monitoring and decision-making capabilities, making it an essential tool for mitigating congestion and reducing traffic-related injuries and fatalities in modern urban environments. These machine learning-powered solutions not only enhance road safety and optimize traffic flow, but also continuously improve through data-driven learning, staying ahead of the curve in the rapidly evolving ITS landscape. ISNS believes our solutions are technologically superior to those of our competitors because they limit the occurrence of false detection, are generally easier to install with lower cost of ownership and allow end users to manage inputs from a variety of sensors for various tasks. The company's sales and distribution channels, particularly our exclusive manufacturing, distributing and technology license agreement with the Econolite Control Products, Inc. position us to expand the reach of our technology-driven solutions in the marketplace. Autoscope video products are marketed in the United States, Mexico, Canada and the Caribbean through exclusive agreements with Econolite and through a nonexclusive agreement in the Middle East. For further information on the company's financial performance, please see our filings on otcmarkets.com or on our website at autoscope.com under the Financials section. Now let's review consolidated financial results for the years ended December 31, 2024, and 2025. Revenue decreased by $4.6 million to $9 million in 2025 compared to $13.6 million in 2024. Revenue from royalties was $8.9 million in 2025 compared to $13.2 million in 2024, a decrease of 32.7%. Sales of Autoscope Vision, which drive royalty revenues decreased in 2025 compared to 2024 due to lower volumes and lower average sales prices as the market transitions to adoption of Autoscope OptiVu and our channel partners drew down high inventory levels. Product sales decreased to $0.1 million in 2025 from $0.4 million in 2024, a decrease of 69.9%. The decrease in product sales was primarily due to decreased sales of runway detection products and decreased sales in the Europe, Middle East and Africa markets. Gross margin for 2025 was 97.9%, a 2.6 percentage point increase from a gross margin of 95.3% in 2024. Gross profit for royalties in 2025 decreased $4 million or 31% compared to the prior year. The decrease in royalty gross profit is primarily the result of lower royalty revenue. Gross margins on royalty sales increased to 100% in 2025 compared to 97.6% in 2024 due to lower product amortization costs associated with capitalized software development, which became fully amortized in 2025. Product sales gross profit in 2025 decreased $160,000 or 152.4% compared to the prior year, primarily due to lower product sales. Gross margins on product sales decreased to a negative 42.6% in 2025 from a positive 24.5% in 2024, primarily due to low sales volume and amortization costs associated with capitalized software development, which are fixed. Selling, marketing and product support expense in 2025 was $0.9 million or 10.3% of total revenue compared to $1.2 million or 9.2% of total revenue in 2024. The decrease in selling, marketing and product support expenses is primarily due to decreased salaries and benefits due to decreased headcount and decreased consulting expenses. The increase in selling, marketing and product support expense as a percent of revenue is primarily the result of lower revenues in 2025 compared to 2024. General and administrative expense decreased to $2.8 million or 31.5% of total revenue in 2025 compared to $3.2 million or 23.2% of total revenue in 2024. The decrease in general and administrative expense in 2025 over 2024 is primarily the result of decreased consulting expenses and decreased executive incentive pay, partially offset by increased depreciation expense relating to the ERP system implemented in the fourth quarter of 2024. The increase in general and administrative expense as a percent of revenue is primarily the result of lower revenues in 2025 compared to 2024. Research and development expense increased to $2.7 million or 29.6% of total revenue in 2025 from $2.4 million or 17.8% of total revenue in 2024. The increase is primarily due to increased consulting fees and increased salaries and benefits, primarily due to merit increases and increased headcount. The increase in research and development expense as a percent of revenue is primarily the result of higher research and development costs and lower revenues in 2025 compared to 2024. In 2025, the company initiated the closure of its Canada and Spain subsidiaries. The cumulative translation loss of $0.6 million previously recorded in accumulated other comprehensive loss was reclassified to earnings as a loss on closure of foreign subsidiaries as part of the loss on disposal. There was no comparable reclassification in 2024. The company recognized investment income of $72,000 for the year ended December 31, 2025, compared to $140,000 for the year ended December 31, 2024. The decrease in investment income is a result of decreased investments, primarily in debt securities. Income tax expense of $478,000 was recorded for the year ended December 31, 2025, compared to $1.768 million for the year ended December 31, 2024. The decrease in income tax expense is primarily due to lower pretax income in 2025 compared to 2024 and the utilization of deferred tax assets in 2024, of which there was no comparable utilization in 2025. Net income was $1.4 million or $0.25 per basic and diluted share in 2025 compared to $4.5 million or $0.82 per basic and diluted share in 2024. At December 31, 2025, we had $0.7 million in cash and cash equivalents compared to $4.4 million at December 31, 2024. Net cash provided by operating activities decreased to $4.6 million in 2025 compared to $5.2 million provided by operating activities in 2024. The decrease was primarily driven by lower net income due to lower royalty revenue and reduced noncash adjustments, including a decrease in deferred income tax expense and amortization. These impacts were partially offset by favorable changes in working capital, primarily improvements in accounts receivable, inventory and accounts payable. Net cash provided by investing activities was $0.9 million in 2025 compared to net cash provided by investing activities of $2.9 million in 2024. Net cash provided by investing activities decreased in 2025 compared to the prior year, primarily due to decreased sales of debt securities, net of purchases of debt securities, partially offset by cash used for capitalized software development for Autoscope Analytics of $0.3 million. Sales of debt securities were $4.3 million during 2025 compared to $10.5 million in 2024, offset by purchases of debt securities of $3.1 million in 2025 and $7.3 million in 2024. Proceeds from the sale of debt securities during 2025 and 2024 were used to fund the special dividend paid in their respective periods. Net cash used for financing activities was $9.1 million in 2025 compared to net cash used by financing activities of $10.2 million in 2024. The decrease in net cash used by financing activities in 2025 is primarily due to a lower special dividend paid in 2025 compared to 2024, partially offset by higher quarterly dividends. In 2025, the company paid a special dividend of $1.05 per share totaling $5.8 million compared to a special dividend of $1.32 per share totaling $7.2 million in 2024. The company paid quarterly dividends of $0.15 per share each quarter, totaling $3.2 million in 2025 compared to quarterly dividends of $0.13 per share for the first 3 quarters and $0.15 per share in the fourth quarter totaling $3 million in 2024. We believe that cash and cash equivalents on hand, coupled with readily available investments in debt and equity securities on December 31, 2025, totaling $2.7 million, along with the cash provided by operating activities will satisfy our projected working capital needs, investing activities and other cash requirements for the foreseeable future. This concludes my remarks concerning recent financial performance. If you have any questions, type your question in the questions section and click submit. We will follow up with a response after this meeting. Now I will turn things over to Andrew Markese for a business update.

Thank you, Lori. Image Sensing Systems brings over 40 years of deep domain expertise in machine vision, machine learning and artificial intelligence, specifically tailored to roadway transportation challenges. To date, we've deployed more than 185,000 roadway sensors across over 80 countries, building a global reputation for reliability, accuracy and ease of use. Our consistent performance has earned image sensing a strong and trusted position in the ITS industry. We are especially proud of our 30 dedicated employees worldwide whose talent and commitment drive our innovation and execution. Much of our team is based in our headquarters in downtown Minneapolis, working in close coordination with our talented colleagues at our subsidiary in Chennai, India. This international collaboration has become a vital part of our operational strength. As we look at 2025, our execution is centered around 3 key pillars: organizational, tactical and strategic. Organizationally, our focus is alignment. We are aligning the business around an industry-leading road map, one designed to deliver meaningful value to our customers across shared mobility initiatives. This alignment is critical. It ensures that we are not only meeting today's expectations, but also positioning the business for tomorrow's increasingly demanding landscape for safety and efficiency initiatives. Tactically, that alignment allows us to execute with greater speed and precision while maximizing the resources at our disposal. And strategically, we are building a foundation for long-term growth. By leveraging our proprietary detection, classification and tracking tools, we can expand our analytics capabilities. Overall, we are positioning Autoscope Technologies to play a larger role in the future of intelligent transportation and roadway safety. Let's take a closer look at our current offerings and where we're headed. At our core, our solutions provide highly accurate detection, classification and tracking across vehicles, bicyclists, pedestrians and other forms of active mobility, navigating today's increasingly complex roadways. But more importantly, we enable better decisions. We help cities reduce congestion, lower emissions and improve safety outcomes. Our current lineup reflects both stability and evolution. Autoscope Vision remains our flagship product. It is now deployed at over 12,000 intersections across North America and continues to lead the market in intersection video detection. Building on that foundation, we introduced Autoscope IntelliSight in 2023. This is our next-generation platform built on proprietary architecture designed to expand both capability and flexibility. In 2025, we officially launched this platform in North America under the new name Autoscope OptiVu. OptiVu has already been approved for sale by our long-standing partner, Econolite, with multiple state qualifications completed and additional approvals underway. We believe this is a significant milestone. Paired with our established channel, the OptiVu platform positions us to deliver a market-leading offering and creates a clear path to higher-value features, enhanced functionality and expanded opportunities for end users. We are especially confident in the overall platform because it represents a fundamental shift, not just in detection capabilities, but in the depth of insight we can provide. Enhanced by AI and built on our historical strengths, this platform allows us to move beyond traditional traffic detection and toward a more intelligent data-driven model. That evolution led to the development of Autoscope Analytics, a key initiative designed to transform our products into a scalable insight-driven ecosystem. With Autoscope analytics, transportation agencies and consultants can turn real-world data into actionable intelligence, supporting planning, improving safety and informing policy decisions. Taken together, this is the most complete and advanced product portfolio we have ever delivered. It reflects a focused commitment from our engineering and product teams to not only meet today's market demand, but to anticipate what comes next. In 2026, our priorities are clear: execute our road map, demonstrate performance, expand higher-value offerings, maintain cost discipline. Today, we remain deeply confident in the strength of our people, products and partnerships. As we continue to align under Autoscope Technologies Corporation, we are more prepared than ever to deliver innovation, drive growth and create lasting shareholder value. Now back to Andrew.

This represents the conclusion of Autoscope Technologies Corporation's Annual Meeting. Thank you for attending the meeting and for your support of Autoscope.