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Route1 Reports 2013 Fourth Quarter and Full Year Financial Results

TORONTO, ONTARIO -- (Marketwired) -- 04/10/14 -- Route1 Inc. (TSX VENTURE: ROI), a leading provider of mobile workspace technologies that unlocks the productivity gains of mobile access without exposing the organization to the risks of data spillage or malware propagation and whose customers include the U.S. Department of Defense, the Department of Homeland Security, the Department of Energy and the Government of Canada, today the Company announced its financial results for the fourth quarter and year ended December 31, 2013.

"I'm pleased we were able to continue to grow our fourth quarter, compared to our third quarter, EBITDA on improved revenue and gross margin," said Tony Busseri, Route1's chief executive officer. "An even more positive development was the progress we made with supporting ID-1 smart card users (CAC, PIV and FRAC) who want to use an iPad, iPad mini, iPhone or iPod touch to securely access enterprise data remotely. Our expanded MobiKEY offering has created deeper and expanded interest within the U.S. Department of Defense to address their mobile workspace requirements."

Business Highlights

Notable developments and achievements during the fourth quarter of 2013 included the following:


--  Brought to market the MobiKEY Fusion A2T device, a patented identity
    validation device that integrates with ID-1 smart cards or government
    issued identity cards such as CAC, PIV and FRAC. The multi-factor
    authentication technology combines physical possession of the MobiKEY
    Fusion A2T device and an identity card, with computer and network
    access, allowing for remote use of an iPad, iPad mini, iPhone or iPod
    touch running iOS 6 or higher.
--  As announced on September 23, 2013, a component of the U.S. Department
    of Homeland Security ordered 7,000 MobiKEY Fusion devices through the
    U.S. Department of Homeland Security FirstSource II contract vehicle.
    During the fourth quarter of 2013, Route1 shipped a further 2,000
    devices with sales value of approximately $0.2 million. The remaining
    4,000 devices were shipped during the first quarter of 2014.

Financial Highlights

Quarter Comparative

For the quarter ended December 31, 2013, total revenue decreased to $1.5 million from $2.3 million ($1.7 million before the arbitration award) in 2012. Gross profit also decreased during the fourth quarter of 2013 to $1.2 million or 78% of revenue compared to gross profit of $1.8 million ($1.2 million before the arbitration award) or 80% of revenue during the fourth quarter of 2012. The decrease in revenue and gross profit is attributable to the 2012 arbitration award. Route1's fourth quarter 2013 total comprehensive net loss was $0.1 million compared to net income of $0.5 million (net loss of $0.1 million before the arbitration award) in the fourth quarter of 2012.

Fiscal Year Comparative

For the year ended December 31, 2013, total revenue decreased to $5.4 million from $9.1 million in 2012. Gross profit also decreased during the year to $4.3 million or 79% of revenue, compared to gross profit of $7.5 million or 83% of revenue during the previous year. The reduction in revenue and gross profit is attributable to the 2012 arbitration award. Route1's 2013 total comprehensive net loss was $0.3 million from net income of $2.2 million in 2012.

The Company's operating results in fiscal year 2013 with 2012 comparatives are as follows:


                                                                    FY 2012
                                                       FY 2012      without
In 000s of CAD dollars                    FY 2013   with Award        Award
                                       -------------------------------------
Revenue                                     5,433        9,050        5,614
Cost of revenue                             1,137        1,562        1,031
                                       -------------------------------------
Gross profit                                4,296        7,488        4,583
Operating expenses                          4,485        4,751        4,751
                                       -------------------------------------
Operating profit (loss) for the year         (189)       2,737         (168)
Total other expenses                         (154)        (579)        (579)
                                       -------------------------------------
Income (loss) from operations                (343)       2,158         (747)
                                       -------------------------------------


Earnings before interest, tax, depreciation, and amortization (Adjusted EBITDA) during the year amounted to $72,000 compared to $2.9 million ($43,000 without award) in 2012.


                                  Dec 31  Sept 30  June 30   Mar 31   Dec 31
in 000s of CAD dollars              2013     2013     2013     2013     2012
                                --------------------------------------------
Revenue                            1,525    1,485    1,366    1,057    2,277
Adjusted EBITDA                       48       22       (7)       9      645
Amortization                          70       69       72       50       47
Operating profit (loss) before
 stock based compensation            (22)     (47)     (79)     (41)     598
                                --------------------------------------------


During the 2013 year Route1 generated cash flow from operations of $0.4 million. As at December 31, 2013, the Company had no bank debt and a cash balance of $699,944.


                                                  Dec 31    Dec 31    Dec 31
in 000s of CAD dollars                              2013      2012      2011
                                              ------------------------------
Cash                                                 700       755        87
Total current assets                               1,588     1,928     5,723
Total current liabilities                          1,715     1,739     7,430
Net working capital                                (127)       189   (1,707)
Total assets                                       2,387     2,503     5,999
Bank debt                                              0         0         0
Total liabilities                                  1,854     1,886     7,539
                                              ------------------------------


Paid, Active Subscribers

As at December 31, 2013, Route1 had 14,602 paying, active subscribers.


in 000s of Canadian dollars for   Dec 31  Sept 30  June 30   Mar 31   Dec 31
 Revenue from subscribers           2013     2013     2013     2013     2012
                               ---------------------------------------------
Closing number                    14,602   14,642   14,784   13,989   15,913
Average number                    14,600   14,697   15,159   13,853   14,870
Revenue per subscriber          $    301 $    310 $    306 $    245 $    259
Revenue                         $  1,100 $  1,139 $  1,158 $    853 $    964
                               ---------------------------------------------


During the fourth quarter of 2013 Route1's average revenue per subscriber was $301, an increase of $42 per subscriber or 16.2%, from the same period in 2012.

Investor Conference Call and Webcast

The Company will also hold a conference call and web cast to discuss the financial results on Thursday, April 10, 2014 at 4:15 pm eastern.

Participants should dial 1-888-287-5563 or 1-719-325-2354 at least 10 minutes prior to the conference time of 4:15 pm eastern. For those unable to attend the call, a replay will be available after 7:15 p.m. at 1-877-870-5176 or 1-858-384-5517, pass code 9010761 until midnight on April 24, 2014. The webcast will be presented live at http://public.viavid.com/index.php?id=108570.

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 affectively 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., 2014. 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, the MobiKEY, MobiKEY Classic, MobiKEY Classic 2 and MobiKEY Fusion devices, and MobiLINK are protected by U.S. Patents 7,814,216 and 7,739,726, Canadian Patent 2,578,053, and other patents pending.

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

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