Route1 Inc.
TSX VENTURE : ROI

Route1 Inc.

April 29, 2008 16:54 ET

Route1 Reports 2007 Fiscal Year Results

TORONTO, ONTARIO--(Marketwire - April 29, 2008) - Route1 Inc. (TSX VENTURE:ROI), the trusted provider of security and identity management network solutions, today announced its 2007 Fiscal Year and Fourth Quarter financial results as at and for the three months and year ended December 31, 2007.

Revenues for 2007 were $1,007,000, an increase of $472,000 or 88%, from $535,000 in the preceding year. Revenues from our device segment for 2007 were $633,000, an increase of $249,000 or 65%, from $384,000 in the preceding year, primarily the result of the increase in the number of devices sold in 2007. Revenues from our services segment for 2007 were $374,000, an increase of $222,000 or 146%, from $152,000 in the preceding year, due to the continued growth in the subscriber base for MobiNET subscription-based services. The cost of revenues decreased by $90,000 or 7% to $1,293,000 for 2007 from $1,383,000 for 2006 and can be summarized as follows: i) the cost of the devices increased by $117,000 due to an increase in the number of devices sold in 2007; ii) the costs of operating and managing the MobiNET subscription-based services decreased by $118,000 year over year, as a result of a decrease in head count; and iii) amortization expense included in cost of revenues decreased by $87,000 year over year. Gross margin loss for 2007 was $285,000, an improvement of $562,000, from $847,000 in the preceding year, $472,000 related to the increase in revenues and $90,000 to the improvement in the cost of revenues as discussed above.

Operating expenses for 2007 were $7,172,000, a decrease of $1,373,000 or 16%, from $8,545,000 in the preceding year. General administration expenses for 2007 were $2,334,000, a decrease of $656,000, or 22%, from $2,990,000 in the preceding year. Research and development expenses for 2007 were $2,245,000, a decrease of $10,000, from $2,255,000 in the preceding year. Selling and marketing expenses for 2007 were $2,308,000, a decrease of $708,000 or 23%, from $3,016,000 in the preceding year.

Net loss for 2007 was $7,464,000 or $0.03 per share, an improvement of $1,410,000, or 16%, from $8,874,000 or $0.05 per share in 2006. Net loss from continuing operations was $7,389,000 or $0.03 per share, an improvement of $1,942,000 or 21%, from $9,331,000 or $0.05 per share in 2006.

Total assets increased by $4,736,000 to $8,325,000 as at December 31, 2007 from $3,589,000 from a year earlier, that included cash and cash equivalents which increased by $4,817,000 to $6,303,000 as at December 31, 2007 from $1,486,000 as at December 31, 2006. To summarize the Company's cash flow for 2007: i) $6,720,000 (2006 - $8,229,000) was used for operations including working capital of $127,000; ii) $334,000 (2006 - $167,000) was used for investing activities including $257,000 in the purchase of capital assets; and iii) $11,871,000 (2006 - $9,044,000) was generated by financing activities including $12,090,000 from the issuance of share capital as related to a private placement completed in November 2007 and warrants being exercised from earlier private placements. As at April 28, 2008, the share capital consisted of 349,388,115 common shares.

"With double-digit growth and our year over year success demonstrated in 2007, Route1's shift towards a hybrid model of direct Enterprise sales, and Channel-driven mid-market support, provides us with the ideal mix to penetrate the secure mobility market", said Andrew White, Route1's President and CEO. "Our solutions are now recognized as sophisticated, multi-factor authentication and end-to-end digital identity products and services - unlike any other competitor. Coupled with our solid sales pipeline, 2008 is shaping up to be the turning point for Route1."

/T/

                            As at and for the three       As at and for the
                           months ended December 31  year ended December 31
                           -------------------------------------------------
(in thousands of Canadian
 dollars, expect per share
 amounts)                           2007       2006        2007        2006
----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Devices                              $46         $4        $633        $383
Services                              98         79         374         152
                                --------------------------------------------
 Total revenues                      144         83       1,007         535
Cost of revenues                     257        228       1,292       1,383
                                --------------------------------------------
Gross loss                          (113)      (145)       (285)       (847)
                                --------------------------------------------
Operating expenses
 General administration              667      1,019       2,334       2,990
 Research and development            523        565       2,245       2,254
 Selling and marketing               424      1,050       2,308       3,016
 Amortization                         72         48         285         285
                                --------------------------------------------
 Total operating expenses          1,686      2,682       7,172       8,545
                                --------------------------------------------
Loss before undernoted            (1,799)    (2,827)     (7,457)     (9,392)
 Write down on investment            (75)         -         (75)          -
 Interest income                      18         25          68          61
 Discontinued operations               -          -           -         457
                                --------------------------------------------
Net loss for the period          $(1,856)   $(2,802)    $(7,464)    $(8,874)
                                --------------------------------------------
                                --------------------------------------------
Loss per share for the period     $(0.00)    $(0.01)     $(0.03)     $(0.05)
                                --------------------------------------------
                                --------------------------------------------

CASH FLOW INFORMATION
Operating activities             $(1,381)   $(2,410)    $(6,720)    $(8,229)
Investing activities                 (75)        43        (334)       (167)
Financing activities               6,984        (82)     11,871       9,044
                                --------------------------------------------
Net cash flow for the period       5,528     (2,449)      4,817         648
Cash, beginning of the period        775      3,935       1,486         838
                                --------------------------------------------
Cash, end of the period           $6,303     $1,486      $6,303      $1,486
                                --------------------------------------------
                                --------------------------------------------

BALANCE SHEET INFORMATION
Working capital                   $6,196     $1,047      $6,196      $1,047
Total assets                      $8,325     $3,589      $8,325      $3,589
Shareholders' equity              $6,652     $1,768      $6,652      $1,768

/T/
In addition, Route1 has amended and restated unaudited interim financial statements for the quarters ended June 30, 2007 and September 30, 2007 as a result of certain changes identified during the course of its annual audit. The Company's restated revenues and net loss for Q2 are $320,869 and $2,097,590 respectively, as compared to the previously reported amounts of $488,093 and $2,012,599 respectively. The amended and restated financial statements provide expanded note disclosure of the effect of the restatement. This expanded note disclosure is found in Note 2 of the restated financial statements. The amended and restated financial statements and management's discussion and analysis have been filed on SEDAR.

ABOUT ROUTE1 INC. Route1 is the trusted provider of security and identity management network solutions that are redefining today's digital landscape. 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. Leveraging the power of MobiNET is the award-winning MobiKEY, an ultra-portable computing device that securely connects users to the myriad of MobiNET services from any Internet-enabled Windows-based PC. This patent-pending computing solution is embedded on a smart-card enabled, cryptographic USB device, making it one of the most powerful and easy-to-use secure computing solutions available today. MobiKEY provides secure remote access to data, applications, network resources, and web content with services such as TruOFFICE and PurLINK. Route1's patent-pending solutions, based on FIPS-140-2 cryptographic modules, meet the stringent security needs and high standards mandated by all levels of government. They have been evaluated by ICSA Labs and certified by the CSE. As a Company with high regard for intellectual property, Route1 continues to encourage and nurture innovation across its talented team. 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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