Route1 Inc.
TSX VENTURE : ROI

Route1 Inc.

November 25, 2008 08:00 ET

Route1 Reports 2008 Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 25, 2008) - Route1 Inc. ("Route1" or "the Company") (TSX VENTURE:ROI), the trusted provider of security and identity management network solutions, today announced its 2008 Third Quarter financial results as at and for the three and nine months ended September 30, 2008.

Highlights for the quarter are as follows:

- Invoiced sales for the current quarter were in excess of $1.3 million, compared to $0.2 million for the same period in the prior year and $0.3 million for the quarter ended June 30, 2008. Approximately $0.4 million has been recorded as revenue in the current quarter, with the remaining $0.9 million showing as an increase in deferred revenues on our balance sheet.

- The Company reduced monthly cash burn to just over $400,000. Cash at September 30, 2008 amounted to $1,584,884, and subsequent to the period end the Company has collected $966,113 of the outstanding accounts receivables.

- Revenues for the third quarter increased by 239% or $323,297 to $458,075 compared to $134,778 for the same period in the prior year.

- Revenues from the device segment increased by 567% or $243,975 to $287,175 for the current period as compared to $43,200 for the same period in the prior year. This increase is due to a large quantity of MobiKEYs(TM) being sold to the Dutch Government's Ministry of Foreign Affairs and the United States Government's Department of Homeland Security (DHS).

- Revenues from the services segment increased by $79,322 or 86% to $170,900 for the current period as compared to $91,578 for the same period in the prior year; this is due to the increasing MobiNET(TM) subscriber base for subscription-based services such as TruOFFICE(TM).

- Deferred revenues for the current quarter increased by 174% or $853,473 to $1,342,959 from $489,486 as at June 30, 2008. This revenue will be recognized as income when such services are delivered and/or performed in future periods.

- Operating expenses for the current quarter were $1,486,133, a decrease of $211,197 or 12%, from $1,697,330 for the same period in the prior year.

- Net loss for the current quarter was $1,304,452 or $nil per share, an improvement of $496,995 or 28% from a net loss of $1,801,447 or $0.01 per share for the same period in the prior year.

- Cash used for the third quarter was $1,231,639 as compared to $1,644,647 for the same period in the prior year and can be summarized as follows: i) $1,328,087 (2007 - $1,730,006) was used for operations including $59,026 for working capital; ii) $2,805 (2007 - $443) was used for investing activities; and iii) $99,253 (2007 - $84,916) was generated by financing activities including $100,000 from the issuance of shares.

- The Company announced it will deliver its highly secure identity management platform to the United States Customs and Border Protection (CBP), a part of the Department of Homeland Security (DHS). The initial three-year deal is valued in excess of $2 million and is being delivered through Route1's reseller partner, Qwest Government Services Inc. under the Washington Interagency Telecommunications System (WITS) 2001 Crossover contract. This agreement is the beginning of a multi-year implementation and covers the license of a DEFIMNET(TM) with the first 500 TruOFFICE(TM) subscriptions included and delivered in September. DHS has the option to acquire up to 95,000 additional subscriptions for TruOFFICE and other Route1 services over the life of the contract on the initial hardware.

- Route1 announced the September delivery of an additional 1,438 Route1 MobiKEYs and TruOFFICE subscription-based services to the United States Customs and Border Protection (CBP), a part of the Department of Homeland Security (DHS). DHS will deploy these additional 1,438 MobiKEYs to their civilian agency workers who will be able to securely access their digital resources and sensitive data from anywhere, and at any time.

- Route1 announced that Cadillac Fairview selected Route1's TruOFFICE(TM) subscription-based service powered by its MobiNET(TM) for its disaster recovery and business continuity solution for its operational and management staff. This will allow Cadillac Fairview's operational and management staff to simply and securely connect to their digital resources from anywhere, at any time, as if they never left the office. In the event of any business disruption, whether it's a blackout, snow storm, transit failure or illness, staff members are able to seamlessly continue business operations from home using TruOFFICE.

- As at November 24, 2008, the share capital consisted of 350,388,115 common shares.

"Route1's Q3 revenues validate our traction in the market place with our strongest quarter to date. We are well-positioned to build on the momentum of customer adoption and revenue intake, combined with the announcements of our relationship with Qwest Government Services, and the licensing of our DEFIMNET(TM) to DHS which will be delivered in December 2008", said Andrew White, President and CEO, Route1 Inc. "The investment we've made in developing a robust and unique solution to security and identity management is being recognized by enterprises and governments alike. Route1 will continue to capitalize on this strong demand."



                                   ----------------------------------------
(in thousands of Canadian dollars,             As at and for the
 except per share amounts)                    three months ended
                                   ----------------------------------------
                                                                   Change
                                    Sept. 30,   Sept. 30,  ----------------
                                        2008        2007          $      %
---------------------------------------------------------------------------
STATEMENT OF OPERATIONS
---------------------------------------------------------------------------
Devices                                $ 287        $ 43      $ 244    567
Services                                 171          92         79     86
                                   ----------------------------------------
 Total revenues                          458         135        323    239
Cost of revenues                         287         254         33     13
                                   ----------------------------------------
Gross margin                             171        (119)       290    244
OPERATING EXPENSES
General and administrative               678         557        106     19
Research and development                 413         564       (151)   (27)
Selling and marketing                    344         500       (156)   (31)
Amortization                              50          76        (26)   (34)
                                   ----------------------------------------
Loss before undernoted                (1,314)     (1,816)       517    (28)
Interest income                           10          15         (5)   (33)
                                   ----------------------------------------
Net loss for the period             $ (1,304)   $ (1,801)     $ 512     28
                                   ----------------------------------------
                                   ----------------------------------------
Loss per share                        $(0.00)     $(0.01)    $ 0.01    100
                                   ----------------------------------------
                                   ----------------------------------------

---------------------------------------------------------------------------
CASH FLOW INFORMATION
---------------------------------------------------------------------------
Operating activities                $ (1,328)   $ (1,730)     $ 402     23
Investing activities                      (3)          -         (3)  (100)
Financing activities                      99          85         14     16
                                   ----------------------------------------
Net cash inflow (outflow)             (1,232)     (1,645)      (413)   (25)
Cash, beginning of period               2817       2,420        397     16
                                   ----------------------------------------
Cash, end of period                  $ 1,585       $ 775      $ 810    105
                                   ----------------------------------------
                                   ----------------------------------------

---------------------------------------------------------------------------
BALANCE SHEET INFORMATION AS AT SEPTEMBER 30
---------------------------------------------------------------------------
Working capital                      $ 2,162       $ 803    $ 1,375    171
Total assets                         $ 4,382     $ 2,931    $ 1,451     50
Obligation under capital lease           $ 8       $ 144     $ (136)   (94)
Shareholders' equity                 $ 2,403     $ 1,443      $ 976     68


                                   ----------------------------------------
(in thousands of Canadian dollars,             As at and for the
 except per share amounts)                     nine months ended
                                   ----------------------------------------
                                                                   Change
                                    Sept. 30,   Sept. 30,  ----------------
                                        2008        2007          $      %
---------------------------------------------------------------------------
STATEMENT OF OPERATIONS
---------------------------------------------------------------------------
Devices                                $ 419       $ 587     $ (168)   (29)
Services                                 418         276        142     51
                                   ----------------------------------------
 Total revenues                          837         863        (26)    (3)
Cost of revenues                         646       1,035       (389)   (38)
                                   ----------------------------------------
Gross margin                             191        (172)       363    211
OPERATING EXPENSES
General and administrative             2,094       1,667        427     26
Research and development               1,538       1,722       (184)   (11)
Selling and marketing                  1,057       1,884       (827)   (44)
Amortization                             178         212        (34)   (16)
                                   ----------------------------------------
Loss before undernoted                (4,676)     (5,657)       981    (17)
Interest income                           75          49         26     53
                                   ----------------------------------------
Net loss for the period             $ (4,601)   $ (5,608)   $ 1,007     18
                                   ----------------------------------------
                                   ----------------------------------------
Loss per share                        $(0.01)     $(0.02)     $0.01    100
                                   ----------------------------------------
                                   ----------------------------------------

---------------------------------------------------------------------------
CASH FLOW INFORMATION
---------------------------------------------------------------------------
Operating activities                $ (4,637)   $ (5,338)     $ 701     13
Investing activities                     (96)       (260)       164     63
Financing activities                      15       4,887     (4,872)  (100)
                                   ----------------------------------------
Net cash inflow (outflow)             (4,718)       (711)    (4,007)  (564)
Cash, beginning of period              6,303       1,486      4,817    324
                                   ----------------------------------------
Cash, end of period                  $ 1,585       $ 775      $ 810    105
                                   ----------------------------------------
                                   ----------------------------------------

---------------------------------------------------------------------------
BALANCE SHEET INFORMATION AS AT SEPTEMBER 30
---------------------------------------------------------------------------
Working capital                      $ 2,178       $ 803    $ 1,375    171
Total assets                         $ 4,382     $ 2,931    $ 1,451     50
Obligation under capital lease           $ 8       $ 144     $ (136)   (94)
Shareholders' equity                 $ 2,419     $ 1,443      $ 976     68


ABOUT ROUTE1 INC.

Route1 delivers award-winning security and identity management solutions to customers worldwide. These solutions provide universal, secure access to all digital resources and sensitive data. At the heart of Route1's solutions is MobiNET, a communications and service delivery platform focused on identity management and entitlement-based access to resources. Route1's patent-pending solutions are based on FIPS-140-2 cryptographic modules, and simplify the process of meeting increasingly stringent regulatory requirements around privacy and security. Headquartered in Toronto, Route1 is listed on the TSX Venture Exchange (symbol: ROI). For more information, visit www.route1.com.

This news release, required by applicable Canadian laws, and does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Route1's current expectations, estimates, forecasts and projections about the operating environment, legal environment, economies and markets in which Route1 operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different from those contemplated in forward-looking statements. Unless otherwise required by applicable securities laws, Route1 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

(C)2008 All rights reserved. Route1, the Route1 Logo, Mobi, Route1 MobiKEY, Route1 TruOFFICE, Route1 PurLINK, Route1 EnterpriseLIVE, and Route1 MobiNET are either registered Trademarks or Trademarks of Route1 Inc. in the United States and or Canada. All other trademarks and trade names are the property of their respective owners.

The TSX Venture Exchange has not reviewed or approved the contents of this press release and does not accept responsibility for its adequacy or accuracy.

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