Route1 Inc.
TSX VENTURE : ROI
OTCQB : ROIUF

Route1 Inc.

November 13, 2017 09:00 ET

Route1 Announces Q3 2017 Financial Results

TORONTO, ONTARIO--(Marketwired - Nov. 13, 2017) - Route1 Inc. (OTCQB:ROIUF)(TSX VENTURE:ROI) (the "Company" or "Route1"), a world-leader in secure data protection technologies and user authentication for government and enterprise, today announced its third quarter (Q3) financial results for the three and nine months ended September 30, 2017.

In 000s of CAD dollars Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016
Revenue
Recurring revenue and services 1,177 1,347 1,911 1,865 1,808
Devices and appliances 159 24 30 21 221
Other 2 0 0 0 2
Total revenue 1,338 1,371 1,941 1,886 2,031
Cost of revenue 362 298 335 338 448
Gross profit 976 1,073 1,606 1,548 1,583
Operating expenses 1,131 1,151 1,289 1,356 1,243
Operating (loss) profit 1 (155 ) (78 ) 317 192 340
Total other expenses 2 (183 ) 157 109 101 34
Comprehensive net (loss) gain (338 ) (235 ) 208 91 306
1 Before stock based compensation and patent litigation
2 Includes AirWatch litigation expenses

Revenue from the recurring revenue and services segment for the three months ended September 30, 2017 decreased $461,000 from the same period in 2016. The decrease is a result of a reduction in the number of paid, active MobiKEY application software users with U.S. Customs and Border Protection, an agency of the U.S. Department of Homeland Security.

Recurring revenue and services
In CAD dollars
Jun 30
2017
Mar 31
2017
Dec 31
2016
Sep 30
2016
Jun 30
2016
Closing number of MobiKEY subscribers 12,261 18,270 17,883 17,344 16,800
Revenue per MobiKEY subscriber $393 $389 $388 $383 $383
MobiKEY subscription revenue 1 $1,176 $1,759 $1,702 $1,639 $1,591
Other recurring revenue and services 1 $0 $152 $163 $169 $169
Total recurring revenue and services 1 $1,347 $1,911 $1,865 $1,808 $1,760
1 Figures are in thousands

Earnings before interest, taxes, depreciation amortization, patent litigation expense and stock-based compensation (Adjusted EBITDA) during the third quarter of 2017 amounted to $(46,000) compared to $447,000 in Q3 2016.

in 000s of CAD dollars Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016
Gross Profit 976 1,073 1,606 1,548 1,583
Adjusted EBITDA (46 ) 16 406 307 447
Amortization 109 94 89 115 107
Operating (loss) profit before patent litigation expense and stock based compensation (155 ) (78 ) 317 192 340

Route1 used cash from operating activities of $0.2 million during Q3 2017 compared with cash generated from operating activities of $0.5 million in Q3 2016. As at September 30, 2017, the Company had no bank debt and a cash balance of $1.4 million.

Balance Sheet Extracts
In 000s of CAD dollars
Sep 30
2017
Jun 30
2017
Mar 31
2017
Dec 31
2016
Sep 30
2016
Cash 1,408 2,080 704 1,946 2,898
Total current assets 2,856 2,924 1,890 2,910 3,938
Total current liabilities 2,534 2,396 1,113 2,500 3,555
Net working capital 322 528 777 410 383
Total assets 4,081 4,213 3,114 4,190 5,230
Bank debt 0 0 0 0 0
Total shareholders' equity 1,432 1,720 1,904 1,600 1,574

Route1's cash position is at its highest level during the second quarter of the fiscal year as a direct result of the timing of certain annual enterprise user subscription renewal payments.

Operations Update

Route1 provided a Q3 2017 Operations Update through a news release issued on October 23, 2017 that provided highlights on operations and business development activities. The news release is archived on the Company's website and can be found at www.route1.com/route1-provides-q3-2017-operations-update/.

Route1 Annual and Special Meeting

The Company's annual and special meeting will be held at 9 am on November 27, 2017 at the offices of Fasken Martineau DuMoulin LLP - Suite 2400, 333 Bay Street, Toronto, Ontario. Management will be available after the meeting to answer questions from shareholders.

About Route1 Inc.

Route1 Inc. is a world-leader in secure data protection technologies and user authentication for government and enterprise. Route1 solutions enable the workforce to be more productive and more flexible without compromising system access, data-at-rest, or data-in-use. The Company's suite of patented enterprise security solutions combines best-in-class authentication, data security and secure communications with streamlined administration tools, running on a proven, trusted infrastructure. From mobile access to business continuity to best-in-class full system encryption, Route1 offers the most effective, affordable methods to secure the digital fortress, while meeting or exceeding the highest standards for government and industry. Route1 has Full Authority to Operate from the U.S. Department of Defense, the U.S. Department of the Navy, the U.S. Department of the Interior, and other government agencies. The Company is also trusted by enterprise security teams in the banking, healthcare, legal and education sectors, among others. With offices in Washington, D.C., Boca Raton, FL and Toronto, Canada, Route1 serves public and private sector clients around the world. Route1 is listed on the OTCQB in the United States under the symbol ROIUF and in Canada on the TSX Venture Exchange under the symbol ROI. For more information, visit: www.route1.com.

This news release, required by applicable Canadian laws, 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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This news release contains statements that are not current or historical factual statements that may constitute forward-looking statements. These statements are based on certain factors and assumptions, including, expected financial performance, business prospects, technological developments, and development activities and like matters. While Route1 Inc. considers these factors and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. These statements involve risks and uncertainties, including but not limited to the risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, except as required by law. Estimates used in this news release are from Company sources.

© 2017 Route1 Inc. All rights reserved. No part of this document may be reproduced, transmitted or otherwise used in whole or in part or by any means without prior written consent of Route1 Inc. See https://www.route1.com/terms-of-use/ for notice of Route1's intellectual property.

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