Route1 Announces Q3 2020 Financial Results

Posts Record Quarterly EBITDA

TORONTO, ON / ACCESSWIRE / November 25, 2020 / Route1 Inc. (OTCQB:ROIUF)(TSXV:ROI) (the "Company" or "Route1"), an advanced North American provider of data-centric business empowerment solutions, today reported its financial results for the three- and nine-month periods ended September 30, 2020.

Statement of operations

In 000s of CAD dollars

 
 
Q32020
 
 
 
Q22020
 
 
 
Q12020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 

Revenue

Subscription and services

 
 
2,599
 
 
 
2,489
 
 
 
1,958
 
 
 
2,511
 
 
 
2,136
 
 
 
1,610
 

Devices and appliances

 
 
6,523
 
 
 
4,477
 
 
 
4,401
 
 
 
5,891
 
 
 
6,576
 
 
 
1,819
 

Other

 
 
25
 
 
 
3
 
 
 
4
 
 
 
1
 
 
 
2
 
 
 
1
 

Total revenue

 
 
9,147
 
 
 
6,969
 
 
 
6,363
 
 
 
8,403
 
 
 
8,714
 
 
 
3,430
 

Cost of revenue

 
 
6,134
 
 
 
4,188
 
 
 
3,997
 
 
 
5,653
 
 
 
5,953
 
 
 
1,672
 

Gross profit

 
 
3,013
 
 
 
2,781
 
 
 
2,366
 
 
 
2,750
 
 
 
2,761
 
 
 
1,758
 

Operating expenses

 
 
2,562
 
 
 
2,570
 
 
 
2,334
 
 
 
2,360
 
 
 
2,336
 
 
 
1,824
 

Operating profit (loss) 1

 
 
451
 
 
 
211
 
 
 
32
 
 
 
390
 
 
 
425
 
 
 
(66
)

Total other expenses 2, 3, 4

 
 
979
 
 
 
271
 
 
 
215
 
 
 
(120
)
 
 
424
 
 
 
487
 

Net income (loss)

 
 
(528
)
 
 
(60
)
 
 
(183
)
 
 
510
 
 
 
1
 
 
 
(553
)

1 Before stock-based compensation

2 Includes stock-based compensation, AirWatch litigation, gain on acquisition and foreign exchange

3 The reimbursements received from Bench Walk pursuant to its investment have been accounted for as a long-term non-monetary liability within the consolidated financial statements, not as a reduction to patent litigation expense. All such amounts are non-recourse to the Company. In connection with the terms of the agreement, the Company does not have a present obligation to pay any amounts until such time as the litigation has been settled or an event of default has occurred. In the event of an award or settlement of the litigation, the Company will be obligated to pay Bench Walk the greater of 10% of such award or settlement and $2,000,000 or $3,000,000 if the litigation proceeds to trial.

4 In the third quarter of 2020, the Company incurred Total Other Expenses of approximately $1.0 million. The largest components are: (a) gain on settlement of litigation of $0.2 million, (b) AirWatch litigation expenses and costs related to posting the fully cash-collateralized bond of $0.4, and (c) a reserve for $0.6 million related to the recovery of goods fraudulently taken from Route1. The Company was the victim of a fraud in the United States perpetrated by a group posing as legitimate customers with the goal of purchasing rugged devices. The Company has paid its vendor of record the full amount and has no further financial obligations. The Company has been in contact with its insurers but there is no assurance the Company will receive any amount of compensation.

Subscription and services revenue

in 000s of CAD dollars

 
 
Q32020
 
 
 
Q2
2020
 
 
 
Q12020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 

Application software

 
 
1,923
 
 
 
1,665
 
 
 
1,217
 
 
 
1,202
 
 
 
1,182
 
 
 
1,196
 

Technology as a service (TaaS)

 
 
241
 
 
 
315
 
 
 
321
 
 
 
353
 
 
 
322
 
 
 
311
 

Other services

 
 
435
 
 
 
509
 
 
 
420
 
 
 
956
 
 
 
632
 
 
 
103
 

Total

 
 
2,599
 
 
 
2,489
 
 
 
1,958
 
 
 
2,511
 
 
 
2,136
 
 
 
1,610
 

Adjusted EBITDA

in 000s of CAD dollars

 
 
Q32020
 
 
 
Q22020
 
 
 
Q1
2020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 

Gross Profit

 
 
3,013
 
 
 
2,781
 
 
 
2,366
 
 
 
2,750
 
 
 
2,761
 
 
 
1,758
 

Adjusted EBITDA 5

 
 
778
 
 
 
556
 
 
 
358
 
 
 
676
 
 
 
743
 
 
 
200
 

Amortization

 
 
327
 
 
 
346
 
 
 
326
 
 
 
286
 
 
 
318
 
 
 
266
 

Operating profit (loss)

 
 
451
 
 
 
211
 
 
 
32
 
 
 
390
 
 
 
425
 
 
 
(66
)

5 Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, stock-based compensation, patent litigation, restructuring and other costs. Adjusted EBITDA does not have any standardized meaning prescribed under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA allows Route1 to compare its operating performance over time on a consistent basis.

Balance sheet extracts

In 000s of CAD dollars

Sep 30

2020

Jun 30

2020

Mar 31

2020

Dec 31

2019

Sep 30

2019

Jun 30

2019

Cash

 
 
–
 
 
 
107
 
 
 
116
 
 
 
126
 
 
 
320
 
 
 
702
 

Total current assets 6

 
 
8,836
 
 
 
5,448
 
 
 
4,391
 
 
 
6,206
 
 
 
6,106
 
 
 
6,219
 

Total current liabilities

 
 
13,385
 
 
 
8,901
 
 
 
7,532
 
 
 
9,035
 
 
 
8,749
 
 
 
8,625
 

Net working capital

 
 
(4,549
)
 
 
(3,453
)
 
 
(3,141
)
 
 
(2,829
)
 
 
(2,643
)
 
 
(2,406
)

Net working capital adjusted for contract liability

 
 
490
 
 
 
800
 
 
 
(1,570
)
 
 
(1,078
)
 
 
(221
)
 
 
(149
)

Total assets

 
 
15,749
 
 
 
12,283
 
 
 
11,501
 
 
 
12,630
 
 
 
11,780
 
 
 
12,268
 

Bank debt and seller notes

 
 
2,609
 
 
 
1,193
 
 
 
2,461
 
 
 
2,415
 
 
 
2,294
 
 
 
1,862
 

Total shareholders' equity 3

 
 
37
 
 
 
778
 
 
 
950
 
 
 
980
 
 
 
473
 
 
 
854
 

6 Included as at September 30, 2020 is restricted cash of US$1,669,840 (CAD $2,226,065) that allowed Route1 to post a cash-collateralized bond with the court in the same amount in connection with the Company's appeal of the United States District Court for the District of Delaware partial granting of AirWatch's motion for attorney's fees in the matter of Route1 Inc. v. AirWatch, LLC.

Net cash flow

In 000s of CAD dollars

 
 
Q32020
 
 
 
Q2
2020
 
 
 
Q12020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 

Cash generated in operating activities

 
 
1,523
 
 
 
1,773
 
 
 
472
 
 
 
64
 
 
 
20
 
 
 
965
 

Cash used in investing activities

 
 
(489
)
 
 
(240
)
 
 
(633
)
 
 
(174
)
 
 
(154
)
 
 
(1,303
)

Cash generated (used) in financing activities

 
 
1,092
 
 
 
(1,543
)
 
 
165
 
 
 
(28
)
 
 
(247
)
 
 
696
 

Net cash inflow (outflow)

 
 
2,126
 
 
 
(10
)
 
 
4
 
 
 
(138
)
 
 
(381
)
 
 
358
 

Business Update Conference Call and Webcast

The Company will hold a conference call and web cast to provide a business update on Wednesday, November 25, 2020 at 9:00 am eastern.

Participants should dial Toll-Free: 1-877-407-0781 or Toll/International: 1-201-689-8568 at least 10 minutes prior to the conference. For those unable to attend the call, a replay will be available on November 25, 2020 after 4 pm eastern at Toll-Free 1-877-481-4010 or Toll/International 1-919-882-2331, pass code #39006 until 10 am on Wednesday, December 2, 2020.

The webcast will be presented live at https://www.webcaster4.com/Webcast/Page/2167/39006.

About Route1 Inc.

Route1 Inc. is an advanced North American technology company that empowers their clients with data-centric solutions necessary to drive greater profitability, improve operational efficiency and gain sustainable competitive advantages, while always emphasizing a strong cybersecurity and information assurance posture. Route1 delivers exceptional client outcomes through real-time secure delivery of actionable intelligence to decision makers, whether it be in a manufacturing plant, in-theater or in a university parking lot. Route1 is listed on the OTCQB in the United States under the symbol ROIUF and in Canada on the TSX Venture Exchange under the symbol ROI. For more information, visit: www.route1.com.

For More Information, Contact:

Tony Busseri
President and Chief Executive Officer
+1 480 500-7030
tony.busseri@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.

© 2020 Route1 Inc. All rights reserved. No part of this document may be reproduced, transmitted or otherwise used in whole or in part or by any means without prior written consent of Route1 Inc. See https://www.route1.com/terms-of-use/ for notice of Route1's intellectual property.

This news release may contain statements that are not current or historical factual statements that may constitute forward-looking statements or future oriented financial information. These statements are based on certain factors and assumptions, including, expectations regarding the success of the private placement and the terms on which the Company will raise funds, price and liquidity of the common shares, expected financial performance, expected subscribers and subscription-based revenue, business prospects, technological developments, development activities, the ability of the Company to obtain the supersedeas bond in order to appeal the decision to the United States Court of Appeals for the Federal Circuit, and like matters. While Route1 considers these factors and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. These statements involve risks and uncertainties, including but not limited to the risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these and other risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement or future oriented financial information to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, except as required by law. Estimates used in this presentation are from Company sources. Past or forecasted performance is not a guarantee of future performance and readers should not rely on historical results or forward-looking statements or future oriented financial information as an assurance of future results.

SOURCE: Route1 Inc.

ReleaseID: 618285