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Route1 Reports Third Quarter 2012 Financial Results

TORONTO, ONTARIO -- (Marketwire) -- 11/26/12 -- Route1 Inc. (TSX VENTURE:ROI) ("Route1" or the "Company"), a digital security and identity management company, today announced its financial results for the three and nine month periods ended September 30, 2012.

Operating results for the three and nine month periods were positively affected by the proceeds of an arbitration award which was received in January 2012. As a result, for the three and nine month periods, $0.6 million and $1.8 million of service revenue were respectively included in the Company's financial statement.

Q3 2012 Financial Results Summary

For the three month period ended September 30, 2012, total revenue increased to more than $1.9 million from $1.4 million in the third quarter of 2011. Gross profit increased during the quarter to $1.7 million or 88% of revenue, versus gross profit of $1.1 million or 81% of revenue during the corresponding period in the previous year. The improvement in gross profit is attributable to a decrease in royalties paid on licenses, and increasing sales of higher margin services revenue as percentage of total sales. As a result, Route1's third quarter 2012 total comprehensive net income increased to $0.2 million from a loss of $0.6 million during the same period last year.

Earnings before interest, tax, depreciation, and amortization ("EBITDA") during the three-month period amounted to $0.5 million compared to an EBITDA loss of $36,000 in the third quarter of 2011.

During the third quarter of 2012, the Company incurred a special charge in the amount of $69,820 related to engaging a U.S. based investment bank as financial advisor to identify potential partners to accelerate Route1's strategic business plan.

As at September 30, 2012, Route1 had no bank debt and a cash balance of $1.4 million.

in 000s of CAD dollars       Sept 30   June 30    Mar 31   Dec 31   Sept 30 
                                2012      2012      2012     2011      2011 
Revenue                        1,933     1,888     2,952    1,401     1,399 
EBITDA                           514       634     1,125   (1,464)      (36)
Amortization                      54        44        36       40        34 
Operating profit (loss)          460       590     1,089   (1,504)      (70)

Year-to Date Financial Results Summary

For the nine month period ended September 30, 2012, total revenue increased to $6.8 million from $4.1 million in the same period in 2011. Gross profit increased to $5.7 million versus $3.3 million during the same period in 2011, as did EBITDA and total comprehensive income, which amounted to $2.3 million and $1.6 million, respectively.

Paid, Active Subscribers

As at September 30, 2012, Route1 had 14,615 paying, active subscribers.

In 000s of CAD dollars for    Sep 30    Jun 30    Mar 31    Dec 31    Sep 30
 Revenue from subscribers       2012      2012      2012      2011      2011
Closing number of                                                           
 subscribers                  14,615    14,876    15,794    15,903    15,796
Average Number of                                                           
 subscribers (1)              14,779    14,911    15,837    15,845    15,776
Revenue per subscriber     $     258 $     253 $     248 $     243 $     246
Revenue from subscribers   $     954 $     942 $     983 $     963 $     969
(1)  Calculated by taking the average of the closing number of subscribers  
     at the end of the month for each of the three months during the        

Product Development Progress

On September 25, 2012 Route1 announced that it had raised the bar for mobile device management and enterprise security by introducing the world's first SMART device, capable of running on both Mac OS X and Windows machines and devices - the MobiKEY Classic 2 (the "MC2").

The MC2:

--  Is a smartcard embedded device that allows subscribers to remotely
    access their office computer, network and other digital resources from
    anywhere at any time; 
--  does not require any pre-installed software to work on a guest computer
    or other remote device; it is completely clientless and driverless; 
--  will never pull or transfer the data they require onto the remote
    computer, thereby completely mitigating any risk of cyber attack or
    potential security breach; and 
--  is the "something you have", while the password, which is verified
    against both the smartcard and the communications service delivery
    platform, is the "something you know". 

Recent Events

On November 13, 2012, Route1 announced it had received a purchase order from a second component of the United States Department of Defense (the "Client"). The purchase order for 1,950 MobiKEY users comprises 1,950 MobiKEY Fusion devices and subscriptions, bringing this Client's MobiKEY paid, active user count and MobiKEY Fusion device count to 2,000 as at December 1, 2012. This award covers the service period December 1, 2012 to March 31, 2013.

On November 20, 2012, Route1 announced that it has received a second purchase order from the Client. The purchase order is for an additional 2,000 MobiKEY Fusion devices and 4,000 MobiKEY subscriptions covering the service period April 1, 2013 to March 31, 2014. Route1 shipped the additional 2,000 MobiKEY Fusion devices on November 21, 2012. The gross value of this award is approximately US $2 million.

Also on November 20, 2012, Route1 announced that it expects its European Government client to reduce its subscriber base effective January 1, 2013. Route1 expects that the annual gross revenue impact will be approximately CAD $460,000.


Route1 continues to work on a diverse group of large enterprise and government client opportunities which are expected to make a material contribution to Route1's subscriber, revenue and earnings growth in 2013 and beyond.

The Company recently provided a business update at its 2012 Annual General Meeting. To access the presentation please go to: http://www.route1.com/company/company_presentations.php.


Route1 delivers industry-leading security and identity management solutions to enterprises worldwide, such as 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.

© Route1 Inc., 2012. 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, MobiLINK, PurLINK, 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 U.S. Patents 7,814,216 and 7,739,726, and other patents pending. Route1 Inc. is the owner of, or licensed user of, all copyright in this brochure, including all photographs, product descriptions, designs and images. No part of this brochure may be reproduced, transmitted or otherwise used in whole or in part or by any means without prior written consent of Route1 Inc.

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.
Ali Mahdavi
Capital Markets Advisor
+1 416-962-3300

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