Route1 Inc.
TSX VENTURE : ROI

Route1 Inc.

June 23, 2011 16:01 ET

Route1 Reports First Quarter 2011 Financial Results

Financial Results represent second consecutive quarter of profitability

TORONTO, ONTARIO--(Marketwire - June 23, 2011) - Route1 Inc. (TSX VENTURE:ROI) ("Route1" or the "Company"), a security and identity management company, today announced its financial results for the three-month period ended March 31, 2011.

All financial statement values presented are prepared under International Financial Reporting Standards and reflect management's best estimates and judgment based on information currently available.

For the three-month period ended March 31, 2011, total revenues increased to $1.4 million versus $1.0 million during the corresponding period in 2010. Services revenue increased by 35 percent to $1.29 million, while Devices and Appliances revenue also increased by 157 percent to $119,351 from $46,515 in the first quarter of 2010. Gross profit for the first quarter of 2011 remained strong at $1.2 million, or 85 percent as a percentage of revenues, versus $897,841, or 89 percent during the same period in 2010. The lower gross margin is attributed to the increased number of devices that were sold at or near cost during the period in the first quarter of 2011 compared to same period in 2010.

EBITDA and net income during the first quarter of 2011 amounted to $205,000 and $60,822, respectively, versus negative EBITDA and net loss of $127,000 and $328,338 during the corresponding period in 2010.

Quarter Ended
In 000s of CAD dollars
Mar 31
2011
Dec 31
2010
Sept 30
2010
June 30
2010
Mar 31
2010
Revenue1,4171,7771,3811,2071,005
Gross Margin1,2071,6991,0311,069898
EBITDA205440(284)(209)(127)
Operating Income (Loss)154405(307)(229)(156)
Net Income (Loss)6110(1,159)(618)(328)

As at March 31, 2011 Route1 had a cash position of $385,749, with nil drawn on its credit facility.

"We continue to make excellent progress with our key customers albeit a little slower than initially anticipated," said Tony Busseri, President and CEO of Route1. "Based on our recent announcements and other opportunities in our pipeline, we expect to see increased revenue and earnings in the coming quarters."

As at June 15, 2011, Route1 had 15,740 paid, active TruOFFICE application software subscribers.

TruOFFICE Subscribers
(in 000s of CAD dollars for Revenue)
Mar 31
2011
Dec 31
2010
Sept 30
2010
June 30
2010
Mar 31
2010
Closing Number15,64215,65415,64813,45116,719
Average Number (1)15,67215,63514,585(2)15,651(3)16,669
Revenue per Subscriber$251$253$248$233$209
Revenue$982$958$904$912$869
  1. Calculated by taking the average of the closing TruOFFICE subscriber number at the end of the month for each of the three months during the quarter.
  2. For the three months ended September 30, 2010, the ending subscriber number includes the 1,533 subscriptions sold to US DHS, CBP on September 16, 2010. Revenue recognition for the new subscriber service, as per Company policy, commenced in the month of October 2010.
  3. During the second quarter of fiscal year 2010, current management evaluated the various pricing models which were used by the previous management team to arrive at a subscriber total. Current management, after reviewing the sustainable and upward trend seen on a revenue per subscriber basis, elected to terminate any heavily discounted and/or free subscriptions as of June 30, 2010. All of these discounted and/or free service arrangements were with channel partners and had been put in place by past management.

First Quarter 2011 Conference Call Details

Route1 will hold a conference call Friday, June 24 at 9:00 a.m. Eastern Standard Time (EST) to discuss the financial results for the first quarter 2011.

Participants should dial 416-340-2216 or 1-866-226-1792 at least 10 minutes prior to the conference time of 9:00 a.m. EST. For those unable to attend the call, a replay will be available at 905-694-9451 or 1-800-408-3053 pass code 6031666 until midnight, July 8, 2011.

ABOUT ROUTE1 INC.

Route1 delivers industry-leading security and identity management solutions to enterprises worldwide – businesses, government and military which need universal, secure access to all digital resources and sensitive data. These customers depend on The Power of MobiNET® - Route1's communications and service delivery platform. MobiNET® provides identity assurance and individualized access to networks and data. Route1's patented solutions are based on FIPS 140-2 cryptographic modules, and simplify the process of meeting increasingly stringent regulatory requirements for privacy and security. 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, 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.

(C) Route1 Inc., 2011. All rights reserved. Route1, the Route1 and shield design Logo, SECURING THE DIGITAL WORLD, Mobi, MobiSecure, Route1 MobiKEY, Route1 MobiVDI, MobiKEY, MobiKEY IBAD, DEFIMNET, MobiNET, Route1 MobiNET, TruOFFICE, TruFLASH, TruOFFICE VDI, MobiKEY Fusion, EnterpriseLIVE, EnterpriseLIVE VO, MobiNET Agent and MobiKEY Classic, 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 and MobiKEY Fusion devices are protected by U.S. Patents 7,814,216 and 7,739,726, and other patents pending.

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.

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