Route1 Inc.
TSX VENTURE : ROI

Route1 Inc.

November 18, 2010 11:56 ET

Route1 Reports Third Quarter Financial Results

- Cashflow breakeven target achieved during the third quarter

- Management expects to generate positive EBITDA in the fourth quarter of 2010

TORONTO, ONTARIO--(Marketwire - Nov. 18, 2010) - 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 September 30, 2010.

For the three-month period ended September 30, 2010, revenues amounted to $1.4 million versus $1.5 million during the corresponding period in 2009. During the same period, subscription revenue increased by 26 percent from $789,689 to $995,082. Gross margin for the third quarter of 2010 amounted to $1.0 million or 75 percent of revenues, versus $1.0 million or 68 percent of revenues during the same period in 2009. On a sequential basis, gross margin in the third quarter decreased compared to the second quarter due to increased sales of devices and appliances which as expected generate lower gross margin. Net loss for the period amounted to $1.1 million or nil per share, compared to a net loss of $1.1 million or nil per share during the third quarter of 2009. Excluding the impact of a non-recurring severance charge of $460,000, the Company's net loss for the third quarter was $597,655.

EBITDA (a non-GAAP measure) during the third quarter amounted to a loss of $284,000, versus a loss $339,000 during the corresponding quarter in 2009.

As at September 30, 2010, Route1 had cash and cash equivalents amounting to $146,694, with no debt. At quarter end, the Company had $1.1 million in accounts receivable with a number of its large customers which have been received and collected in the fourth quarter.

"I am pleased to report that we reached the cash flow breakeven target during the third quarter while servicing customers and building new relationships," said Tony Busseri, President and CEO of Route1. "With the successful completion of the pilot program with one of our key customers, we are now in discussions with multiple parties of similar profile. 2010 has been a year of rebuilding, refocusing and fostering relationships which we expect will lead to, and mark, 2011 as a year of further revenue and earnings growth for Route1."

As at September 30, 2010, Route1 had 15,648 active and paying TruOFFICE subscribers, versus 13,451 subscribers at June 30, 2010. 

"While we work with key customers to finalize roll-out plans, and on new pilot programs with new customers, our outlook for subscriber growth is extremely positive with a view which is much larger than 100,000 users," added Tony Busseri.

Third Quarter 2010 Conference Call

Route1 will hold a conference call today at 4:00 p.m. Eastern Standard Time (EST) to discuss the financial results for the third quarter, and the Company's business and growth plan. Scheduled speakers for the call include Tony Busseri, President and CEO, and Ali Mahdavi, Capital Markets Advisor of Route1.

Participants should dial 416-340-8527 or 1-877-440-9795 at least 10 minutes prior to the conference time of 4:00 p.m. EST. For those unable to attend the call, a replay will be available after 6:00 p.m. at 905-694-9451 or 1-800-408-3053 pass code 2818210 until midnight, December 2, 2010.

ABOUT ROUTE1 INC.

Route1 delivers industry-leading security and identity management solutions to corporations and government agencies who 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.

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.

©2010 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.

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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