Route1 Inc.
TSX VENTURE : ROI

Route1 Inc.

January 28, 2016 11:00 ET

Route1 Provides Q4 Operations Update

TORONTO, ONTARIO--(Marketwired - Jan. 28, 2016) - Route1 Inc. (TSX VENTURE:ROI) (the Company or Route1), a leading provider of secure access technologies for the mobile workspace to protect businesses and government agencies, today provided an update on market drivers, its operations and business development activity.

MobiKEY Paid, Active Subscribers

As at December 31, 2015, Route1 had 16,286 paying, active subscribers.

Paid, Active Subscribers
In CAD Dollars
Closing
Subscriber
Count
Quarterly
Subscriber
Growth
Count
Quarterly
Average
Revenue per
Subscriber
Quarterly
Subscriber
Revenue
Quarterly
Subscriber
Revenue
Growth
December 31, 2015 16,286 297 $361 $1,466,000 $42,000
September 30, 2015 15,989 579 $362 $1,424,000 $78,000
June 30, 2015 15,410 398 $353 $1,346,000 $94,000
March 31, 2015 15,012 220 $334 $1,252,000 $31,000
December 31, 2014 14,792 147 $334 $1,221,000 $10,000
September 30, 2014 14,645 184 $332 $1,211,000 $26,000

"The fourth quarter was another good quarter for Route1, especially as this is seasonally a weaker quarter for user growth within the US government. Growth in the quarter principally came from the U.S. Navy," said Tony Busseri, Route1's CEO. "We continue to build and strengthen our relationship with the prime contractor, and have dedicated meaningful additional sales and marketing resources to support the expansion of this account."

Business Development Highlights

Last week's historic and powerful winter snow storm that hit much of the northeastern U.S. reinforced the important role Route1 has within the U.S. government to deliver secure mobile access for government employees and contractors accessing enterprise data, tools and resources by leveraging their office computer from a remote location as a matter of necessity or preference. Route1 realized very strong usage for its MobiKEY technology from its U.S. government customer base; the Department of Defense and numerous civilian departments and agencies.

"Several of our government customers requested MobiKEY usage statistics, some as frequently as hourly. MobiKEY enabled U.S. government employees and contractors to be fully productive in spite of weather related government shut-downs spanning a five-day period," said Brian Brunetti, Route1's President. "Our service delivery platforms, MobiNET and DEFIMNET, are built to operate in a high availability, fully redundant fashion so that they can operate at full capacity even with the failure of any single component, without impact to concurrency or capacity. The infrastructure has been designed to support capacities larger than currently being utilized by our existing customers. Further, it is architected in a way that every component is easily scalable to support increased demand."

Route1 has continued to see strong interest in its MobiKEY technology from civilian, intelligence and defense components within the U.S. government.

  • U.S. Department of the Interior (U.S. Fish & Wildlife Service) - As announced on January 14, 2016 the U.S. Department of the Interior (DOI), after completing its accreditation process, issued an authority to operate (ATO) for the MobiKEY technology and the DEFIMNET platform that the U.S. Fish and Wildlife Service (FWS) installed at a secure DOI hosting facility in March 2015. Over the past two weeks Route1 has been working with FWS to harden and deploy updates to the DEFIMNET infrastructure to bring it fully online, and is in the process of swapping out MobiKEY Fusion devices for the latest generation MobiKEY Fusion3 devices that were procured by FWS in the fourth quarter of 2015.
  • U.S. Office of Personnel Management - The reported June 2015 data breaches at the Office of Personnel Management (OPM) brought needed attention to the lack of full compliance with two-factor authentication policy (HSPD-12), the use of unaccredited technology within government networks and failure to properly protect data-at-rest within certain components of the U.S. government. It also has created a driver for civilian components to reconsider their approach to secure mobile access and authentication. Route1 has had renewed interest in the MobiKEY technology from the Office of the CIO with the Department of Commerce; a number of components with the Department of Agriculture (USDA) have engaged Route1 in the potential use and procurement of MobiKEY; and, most recently, Route1 advanced an active pilot with the Transportation Security Administration (TSA), a component of the U.S. Department of Homeland Security.
  • U.S. Department of Defense - Route1 continues to benefit from growing awareness of MobiKEY within the U.S. Department of Defense (DOD). During the 2015 current calendar year, Route1 worked with a number of groups within the U.S. Air Force, the U.S. Marine Corps, and a component of the U.S. Army that is leading a Certificate of Networthiness accreditation process to use the MobiKEY technology on the U.S. Army network.

Route1 expects that these and other civilian and DOD proof of concepts and pilots may lead to further paid user adoption of the MobiKEY technology in 2016 and beyond. If and when procurement occurs, it will most likely follow past Route1 experiences of initial orders in the tens or hundreds of users followed by user growth over time.

Upcoming Business Development Events

GSA, FAA, HUD, Department of Energy Technology and Vendor Expo
February 3, 2016 - L'Enfant Plaza, Washington, DC
Marine West 2016
February 3-4, 2016 - Marine Corps Base Camp Pendleton, CA - Booth 505
AFCEA West 2016
February 17-19, 2016 - San Diego, CA - Booth 1443

Product Development Update

Route1 technology releases during the fourth quarter of 2015 and the first three weeks of calendar 2016:

Technology Release Attributes Description
MobiKEY 5.0 Bootable MobiKEY - A new security feature built into the MobiKEY Fusion3 and MobiKEY Classic 3 (MC3) devices that provide the user the option to boot from the MobiKEY device; bypasses the remote asset's existing operating system.
Secure Storage - A new feature that provides an encrypted partition available for secure file storage on the MobiKEY Fusion3 and MC3 devices, encrypted to the user's PIV, CAC or embedded smart card. The encrypted partition only becomes accessible after successful authentication.
Remote assets operating system support - Added Linux support using the MobiKEY Fusion3 and MC3 devices. Linux operating systems supported include Mint, Fedora, Ubuntu and CentOS.
- Extended Mac OS X 10.11 El Capitan support. Mac OS X operating systems supported include: 10.7 Lion, 10.8 Mountain Lion, 10.9 Mavericks, 10.10 Yosemite and 10.11 El Capitan.
- Extended Windows 10 support. Windows operating systems supported include: Windows XP (32 bit), Windows Vista (32 and 64 bit), Windows 7, 8.0, 8.1 and 10 (32 and 64 bit).
Host assets audio support - Extended Windows 10 support. Windows operating systems supported include: Windows Vista (32 and 64 bit), Windows 7, 8.1 and 10 (32 and 64 bit), Windows Server 2008 R2 (64 bit), Windows Server 2012 R2 (64 bit).
Remote audio support enhancement - Added remote audio support for users connecting from remote assets using Mac OS X 10.10 or higher Mac OS X operating systems to host assets with the MobiNET Agent software version 5.0 installed.
- Remote audio support was first promoted for MobiKEY 4.4 users connecting from a Windows remote asset.
Internet Protocol version 6 (iPv6) support - Added IPv6 is the most recent version of the Internet Protocol, the communications protocol that provides an identification and location system for computers on networks and routes traffic across the Internet.
Other - Other bug fixes and enhancements.
MobiKEY 5.1 Multiple smart card readers support - For environments requiring the use of a second smart card to elevate access or execution privileges, remote users can now use a secondary MobiKEY Fusion3 device to support this functionality.
- This feature is available on the Windows versions that MobiKEY supports with the exception of Vista on the Host Assets.
- Both the MobiKEY application software and the MobiNET Agent software must be at version 5.1 or higher.
MAP 3.0 Improved user experience, - MobiNET Administration and Provisioning (MAP).
bug fixes and other enhancements. - A web based portal and suite of tools that allows IT administrators to provision, monitor and manage the identity, entitlement, and services of subscribers to the MobiNET (DEFIMNET) platform.
- This simple-to-use administration system enables organizations to cost-effectively manage large-scale deployments of Route1's solutions.

Expected Route1 technology releases during the first quarter of 2016:

Technology Release Attributes Target Release Date
MobiKEY 5.0 for iOS - Support iOS 9 Before February 28,
- Improved UX 2016
- Bug fixes and other enhancements
MobiKEY 5.0 for - Improved UX Before March 31,
Android - Bug fixes and other enhancements 2016
MobiENCRYPT - Full disk encryption technology that encrypts the Windows operating system leveraging smart card based credentials Before March 31,
2016
- The MobiKEY Fusion3 device will leverage government issued PIV or CAC credentials to enhance HSPD-12 and FIPS-201 compliance.
- Features: pre-boot authentication, key recovery, identification of non-encrypted assets, remote key revocation, UEFI with GPT and transparent FDE

Route1 also has a number of additional ongoing development initiatives that for competitive reasons it cannot disclose to the market place at this time. The new technologies center around a current Route1 core competency - public key infrastructure (PKI) based mutual authentication (a fundamental component to achieving a high level of assurance in communication), lifecycle management of credentials and access to data.

One area of focus for Route1 will be to make mobility less cumbersome, but NOT less secure. As Major General Sarah Zabel, the Defense Information Systems Agency's (DISA) Vice Director, communicated at an AFCEA mobile technology event held last week in Washington, D.C., DISA plans on using derived credentials that are stored on the mobile device. PKI is at the core of derived credentials and Route1 plans on bringing to market its own derived credential offering in calendar 2016.

Share Repurchase Program

On September 22, 2015, the Company announced with approval from the TSX Venture Exchange its intention to make a Normal Course Issuer Bid (NCIB). The NCIB permits the Company to purchase for cancellation up to 5% of the common shares in the public float. The maximum number of shares allowed for repurchase is 18,262,570. Purchases under the NCIB commenced September 27, 2015 and will end September 26, 2016, or the date upon which the maximum number of common shares have been purchased by the Company. As of December 31, 2015 the Company has purchased a total of 2,592,000 common shares under the NCIB.

Since the first NCIB was announced on February 28, 2012, Route1 has repurchased a total of 26,261,200 of its common shares, representing 6.8% of Route1's common shares outstanding as at February 28, 2012.

As at January 27, 2016, Route1 has 360,894,414 common shares outstanding.

ABOUT MOBIKEY

Route1 enables the mobile workspace without compromising on security. Its flagship technology MobiKEY uniquely combines secure mobile access with high assurance identity validation and plug-and-play usability. Remote and mobile workers are able to securely and cost-effectively access their workspace from any device without exposing the organization to the risk of data loss or malware propagation.

ABOUT MOBINET

The MobiNET is a universal identity management and service delivery platform that confirms the identities of individual users and their entitlement to access specific applications, data or resources. DEFIMNET is a private instance of MobiNET

ABOUT ROUTE1, INC.

Route1 enables the mobile workspace without compromising on security. Its flagship technology MobiKEY uniquely combines secure mobile access, with high assurance identity validation and plug-and-play usability. Remote and mobile workers are able to securely and cost-effectively access their workspace from any device without exposing the organization to the risk of data spillage or malware propagation. MobiKEY customers include Fortune 500 enterprises as well as the U.S. Department of Defense, the Department of Homeland Security, the Department of Energy and the Government of Canada. Headquartered in Toronto, Canada, Route1 is listed on the TSX Venture Exchange.

For more information, visit our website at: 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.

© Route1 Inc., 2016. All rights reserved. Route1, the Route1 and shield design Logo, SECURING THE DIGITAL WORLD, Mobi, MobiSecure, MobiLINK, Route1 MobiKEY, Route1 MobiVDI, MobiKEY, MobiKEY IBAD, DEFIMNET, MobiNET, Route1 MobiNET, TruOFFICE, TruFLASH, TruOFFICE VDI, MobiKEY Fusion, MobiNET Aggregation Gateway, MobiNET Switching Array, MobiNET Secure Gateway, EnterpriseLIVE, EnterpriseLIVE Virtualization Orchestrator, MobiNET Agent, MobiKEY Classic and MobiKEY Classic 2, 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 DEFIMNET and MobiNET platforms, and the MobiKEY, MobiKEY Classic, MobiKEY Classic 2 and MobiKEY Fusion devices are protected by copyright, international treaties, and various patents, including Route1's U.S. Patents 7,814,216 and 7,739,726, Canadian Patent 2,578,053, and other patents pending. The MobiKEY Classic 2 is also protected by U.S. Patents 6,748,541 and 6,763,399, and European Patent 1001329 of Aladdin Knowledge Systems Ltd. and used under license. Other patents are registered or pending in various countries around the world.

Other product and company names mentioned herein may be trademarks of their respective companies.

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