Route1 Inc.
TSX VENTURE : ROI

Route1 Inc.

July 20, 2009 07:30 ET

Route1 Reports 2009 Second Quarter Financial Results

- Reports record revenue and generates positive cash flow

- Delivers DEFIMNET to US Government's Department of Homeland Security

- Starts delivering on Qwest Government Services' commitment to purchase 30,000 MobiKEY devices and 30,000 TruOFFICE subscriptions valued at approximately US$8 Million

TORONTO, ONTARIO--(Marketwire - July 20, 2009) - Route1 Inc. ("Route1") (TSX VENTURE:ROI), the trusted provider of security and identity management network solutions, today reported its 2009 second quarter financial results as at and for the three and six months ended June 30, 2009.

For the three months ended June 30, 2009, Route1 reported record revenue of $1,583,319, representing an increase of $1,398,383 or 657% from $184,936 for the same period in 2008. Gross margin increased by $675,262 for the period to $677,654 or 43% of total revenue versus $2,392 or 1% of total revenue in same period in 2008. Operating expenses decreased by 24% or $404,733 for the period to $1,300,249 versus $1,704,982 in the corresponding period in 2008. Net loss improved by $1,060,494 for the period to $619,650 or $nil per share, compared to a net loss of $1,680,144 or $nil per share for the same period in 2008.

For the six months ended June 30, 2009, Route1 reported record revenue of $2,021,838, representing an increase of $1,642,605 or 433% from $379,233 for the same period in 2008. Gross margin increased by $975,543 for the period to $995,636 or 50% of total revenue versus $20,093 or 5% of total revenue in same period in 2008. Operating expenses decreased by 24% or $831,883 for the period to $2,565,524 versus $3,397,407 in the corresponding period in 2008. Net loss improved by $1,748,986 for the period to $1,563,708 or $nil per share, compared to a net loss of $3,312,694 or $0.01 per share for the same period in 2008.

"I am extremely pleased with our progress in the second quarter, with record revenue, and activated keys in the hands of our large customers," noted Andrew White, President and CEO Route1. "We continue to execute on delivering our ground breaking identity-based services and technology to the US Department of Homeland Security and Qwest, as well as other international governments and organizations. The growing adoption of Route1's technology has given us strong momentum as we have entered the third quarter."

As at June 30, 2009, Route1 had cash amounting to $1,244,369 compared to $755,136 at March 31, 2009. On January 7, 2009, Route1 announced Qwest Government Services Inc. commitment to purchase in 2009, a minimum of 30,000 MobiKEY(TM) devices and 30,000 TruOFFICE(TM) subscription-based services, which is valued at approximately US$8.0 million. Route1 delivered approximately 2,000 MobiKEY devices and 2,000 TruOFFICE subscriptions valued at approximately US$500,000 in the second quarter. The remaining amount will be delivered in the third and fourth quarters of 2009.

Currently, the share capital consists of 350,388,115 common shares and 400,954,564 common shares on a basic and fully diluted basis, respectively.


(in thousands of Canadian
 dollars, except per share     --------------------------------------------
 amounts)                           As at and for the three months ended
                               --------------------------------------------
                                                               Change
                                  June 30,     June 30,  ------------------
                                     2009         2008          $        %
---------------------------------------------------------------------------
STATEMENT OF
OPERATIONS
---------------------------------------------------------------------------
Revenues
 Devices                          $ 1,017         $ 55      $ 962     1749%
 Services                             566          130        436      335
---------------------------------------------------------------------------
 Total revenues                     1,583          185      1,398      756
Cost of revenues                      905          183        722      395
---------------------------------------------------------------------------
Gross margin                          678            2        676      N.M.
---------------------------------------------------------------------------
Operating expenses
 General administration               462          714       (252)     (35)
 Research and development             473          543        (70)     (13)
 Selling and marketing                337          386        (49)     (13)
 Amortization                          29           62        (33)     (53)
---------------------------------------------------------------------------
 Total operating expenses           1,301        1,705       (404)     (24)
---------------------------------------------------------------------------
Loss before undernoted               (623)      (1,703)     1,080       64
 Interest income                        3           23        (20)     (87)
---------------------------------------------------------------------------
Net loss for the period            $ (620)    $ (1,680)   $ 1,060       63%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Loss per share                    $ (0.00)     $ (0.00)         -        -
---------------------------------------------------------------------------
---------------------------------------------------------------------------

-------------------------------------------------------------------
CASH FLOW
INFORMATION
------------------------------------------------------------------
Operating activities                $ 492     $ (1,784)   $ 2,276
Investing activities                   (3)         (47)        44
Financing activities                    -          (30)        30
------------------------------------------------------------------
Net cash inflow (outflow)             489       (1,861)   $ 2,350
Cash, beginning of period             755        4,677     (3,922)
------------------------------------------------------------------
Cash, end of period               $ 1,244      $ 2,816   $ (1,572)
------------------------------------------------------------------
------------------------------------------------------------------

------------------------------------------------------------------
BALANCE SHEET INFORMATION AS AT JUNE 30
------------------------------------------------------------------

Working capital                     $ 514      $ 3,262   $ (2,748)
Total assets                      $ 2,767      $ 5,028   $ (2,261)
Obligation under capital lease        $ -          $ 9        $ 9
Shareholders' equity                $ 146      $ 3,552   $ (3,406)



(in thousands of Canadian
 dollars, except per share     --------------------------------------------
 amounts)                             As at and for the six months ended
                               --------------------------------------------
                                                                 Change
                                  June 30,     June 30,   -----------------
                                     2009         2008          $        %
---------------------------------------------------------------------------
STATEMENT OF
OPERATIONS
---------------------------------------------------------------------------
Revenues
 Devices                          $ 1,118        $ 132      $ 986      747%
 Services                             904          247        657      266
---------------------------------------------------------------------------
 Total revenues                     2,022          379      1,643      434
Cost of revenues                    1,026          359        667      186
---------------------------------------------------------------------------
Gross margin                          996           20        976    4,880
---------------------------------------------------------------------------
Operating expenses
 General administration               924        1,431       (507)     (35)
 Research and development             959        1,125       (166)     (15)
 Selling and marketing                622          713        (91)     (13)
 Amortization                          61          128        (67)     (52)
---------------------------------------------------------------------------
 Total operating expenses           2,566        3,397       (831)     (24)
---------------------------------------------------------------------------
Loss before undernoted             (1,570)      (3,377)     1,807       54
 Interest income                        6           64        (58)     (91)
---------------------------------------------------------------------------
Net loss for the period          $ (1,564)    $ (3,313)   $ 1,749       53%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Loss per share                    $ (0.00)     $ (0.01)    $ 0.01        -
---------------------------------------------------------------------------
---------------------------------------------------------------------------

------------------------------------------------------------------
CASH FLOW
INFORMATION
------------------------------------------------------------------
Operating activities               $ (867)    $ (3,310)   $ 2,443
Investing activities                   (6)         (93)        87
Financing activities                   (3)         (84)        81
------------------------------------------------------------------
Net cash inflow (outflow)            (876)      (3,487)   $ 2,611
Cash, beginning of period           2,120        6,303     (4,183)
------------------------------------------------------------------
Cash, end of period               $ 1,244      $ 2,816   $ (1,572)
------------------------------------------------------------------
------------------------------------------------------------------

------------------------------------------------------------------
BALANCE SHEET INFORMATION AS AT
------------------------------------------------------------------

Working capital                     $ 514      $ 3,262   $ (2,748)
Total assets                      $ 2,767      $ 5,028   $ (2,261)
Obligation under capital lease        $ -          $ 9        $ 9
Shareholders' equity                $ 146      $ 3,552   $ (3,406)

                                                  

ABOUT ROUTE1 INC.

Route1 delivers award-winning security and identity management solutions to customers world-wide. 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)2009 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.

Contact Information

  • Investor Relations
    Spinnaker Capital Markets Inc.
    Ali Mahdavi
    +1 416-962-3300
    am@spinnakercmi.com
    or
    Route1 Inc.
    Anthony Rzepka
    Executive Vice President and CFO
    +1 416-848-8391
    ir@route1.com
    or
    Media Contact
    Route1 Inc.
    Tanieu Tan
    Director, Marketing and Communications
    +1 416-814-2615
    tanieu.tan@route1.com