Route1 Inc.
TSX VENTURE : ROI
OTCQB : ROIUF

Route1 Inc.

October 23, 2017 09:00 ET

Route1 Provides Q3 2017 Operations Update

Q3 2017 Financial Results to be released on November 13, 2017

TORONTO, ONTARIO--(Marketwired - Oct. 23, 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 provided an update on its operations and business development activity.

Operations Update

MobiKEY Business Development Update: Route1 experienced robust growth in the number of MobiKEY users in the third quarter of 2017 with the increase coming from both new and existing U.S. Department of Defense and Civilian accounts. MobiKEY paid, active users grew by 612. Average annualized revenue per subscriber for the quarter was CAD$393. Route1 also received the renewal for 1,000 MobiKEY users from U.S. Fish and Wildlife Service, a bureau in the U.S. Department of the Interior.

Recurring revenue and services
In CAD dollars
Sep 30
2017
June 30
2017
Mar 31
2017
Dec 31
2016
Sep 30
2016
Jun 30
2016
Closing number of MobiKEY subscribers 12,261 11,649 18,270 17,883 17,344 16,800
Revenue per MobiKEY subscriber $393 $391 $389 $388 $383 $383

During the third quarter, the Company received an Authority to Connect to the network of the U.S. Army and Route1 received its first order from that service branch of the Armed Forces. The U.S Army is the largest service branch of the Armed Forces and Route1 is proud to be a trusted technology provider to the Army.

In addition, the Company received an order for 2,000 MobiKEY Fusion3 devices during the quarter from the Joint Service Provider (JSP), which recently transitioned to become part of the Defense Information Systems Agency (DISA). A total of 1,000 MobiKEY Fusion3 devices were shipped during the quarter and the balance is expected to be shipped during the fourth quarter of 2017. This order reinforces JSP's continued use of Route1's MobiKEY technology.

Route1 continues to receive MobiKEY subscription growth from the U.S. Department of the Navy. In addition, in August 2017 the U.S. Marine Corps distributed a command-wide communication that informed personnel that the MobiKEY technology is a highly secure and extremely flexible remote access solution that is fully accredited and has been approved as a Marine Corps Certified Application by the USMC Authorizing Official. Route1 expects this communication will allow the Company to expand its paid, active user base within the Marine Corps.

From mid-September through the balance of 2017, Route1 has attended and will attend in excess of 10 conferences and technology days focusing on various U.S. Department of Defense accounts including the Navy, Army, Marine Corps and Air Force. In addition, the Company had the opportunity to present MobiKEY to a group of CIOs from several California-based health plans. This group represents a new opportunity to expand the MobiKEY technology usage into the civilian healthcare vertical. Route1 has had success in growing its MobiKEY subscriber base with the Navy's Bureau of Medicine and Surgery.

Further, the Company has invested in augmenting its business development team with the assistance of a professional sales specialist firm focused on driving additional growth in the U.S. Department of Defense and Civilian accounts.

Route1 expects to increase the number of MobiKEY subscribers in the fourth quarter of 2017 beyond the number of new subscribers realized in the third quarter of 2017; largely being driven by initiatives with various U.S. Department of Defense accounts and pilots that have been ongoing for the past several months. We expect to increase MobiKEY subscribers further by being in a position to capitalize on the above-noted Marine Corps and Army approvals.

Spotlight, Powered by MobiNET (Spotlight) Business Development Update: On July 27, 2017 Route1, and its partner HTM Sensors, announced that they had entered into a trial for Spotlight with a Tier 1 automotive parts manufacturer which has one of its plants located in North York, Ontario, Canada. The Spotlight technology has been operating on one production line at this plant since that date and, recently the manufacturer approved the installation of Spotlight on a second production line in the same plant. This company has 27 manufacturing plants worldwide and all of these plants are potential candidates for Spotlight.

In September 2017, HTM Sensors and Route1 installed Spotlight on a pilot basis at another Tier 1 manufacturer. This pilot has been successful and HTM Sensors is in discussions with the party to convert the pilot into a contract for the paid use of Spotlight. Four additional automotive parts manufacturers are also in various stages of provisioning for pilot or piloting Spotlight.

Also in September 2017, HTM Sensors participated at CMTS 2017, Canada's largest manufacturing event, where Spotlight was featured. Several global automotive manufacturers expressed interest in Spotlight. HTM Sensors will be attending the FABTECH 2017 trade show in Chicago from November 6-9 and will feature Spotlight. This trade show is the largest of its kind in North America.

Spotlight 1.5 was released late last week. The new version of Spotlight provides additional functionality including top total downtime events, top sensor events, top valve events and live downtime events. The latter is measured not only in time but also in parts lost and efficiency lost. These items are important for the plant management team as they provide the data required to calculate the monetary value of the lost time resulting from sensor and valve failures on the assembly line.

Litigation Update: The litigation of the Company's patent infringement claim against AirWatch LLC is proceeding. In late August 2017, the U.S. District Court for the District of Delaware issued a Scheduling Order determining the dates by which the major steps in the case must be completed. The trial is scheduled for September 5 to 9, 2019. However, AirWatch has filed a petition with the U.S. Patent Office to institute an Inter Partes review in which the Route1 patent claims are re-examined with AirWatch claiming that the subject patent is invalid. The U.S. Patent Office has until April 6, 2018 to render a decision on whether or not to institute a review. Should this review be granted, it is likely that the trial date will be delayed between one and one and a half years. Route1 and its counsel continue to believe that the Company's claim against AirWatch is strong and Route1 will continue to aggressively prosecute its claim.

Q3 2017 Financial Results

The Company expects to issue it third quarter financial results on November 13, 2017. As Route1's annual and special meeting falls two weeks after the third quarter results are released, the Company will not hold a quarterly conference call and webcast for this quarter.

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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