Route1 Announces Q2 2020 Financial Results

TORONTO, ON / ACCESSWIRE / August 26, 2020 / Route1 Inc. (OTCQB:ROIUF) and (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 six-month periods ended June 30, 2020.

Statement of operations

In 000s of CAD dollars

 
 
Q22020
 
 
 
Q12020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 
 
 
Q12019
 

Revenue

Subscription and services

 
 
2,489
 
 
 
1,958
 
 
 
2,511
 
 
 
2,136
 
 
 
1,610
 
 
 
1,576
 

Devices and appliances

 
 
4,477
 
 
 
4,401
 
 
 
5,891
 
 
 
6,576
 
 
 
1,819
 
 
 
1,883
 

Other

 
 
3
 
 
 
4
 
 
 
1
 
 
 
2
 
 
 
1
 
 
 
3
 

Total revenue

 
 
6,969
 
 
 
6,363
 
 
 
8,403
 
 
 
8,714
 
 
 
3,430
 
 
 
3,462
 

Cost of revenue

 
 
4,188
 
 
 
3,997
 
 
 
5,653
 
 
 
5,953
 
 
 
1,672
 
 
 
1,700
 

Gross profit

 
 
2,781
 
 
 
2,366
 
 
 
2,750
 
 
 
2,761
 
 
 
1,758
 
 
 
1,762
 

Operating expenses

 
 
2,570
 
 
 
2,334
 
 
 
2,360
 
 
 
2,336
 
 
 
1,824
 
 
 
1,694
 

Operating profit (loss) 1

 
 
211
 
 
 
32
 
 
 
390
 
 
 
425
 
 
 
(66
)
 
 
68
 

Total other expenses 2, 3

 
 
271
 
 
 
215
 
 
 
(120
)
 
 
424
 
 
 
487
 
 
 
580
 

Net income (loss)

 
 
(60
)
 
 
(183
)
 
 
510
 
 
 
1
 
 
 
(553
)
 
 
(512
)

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.

Subscription and services revenue

in 000s of CAD dollars

 
 
Q22020
 
 
 
Q12020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 
 
 
Q12019
 

Application software

 
 
1,665
 
 
 
1,217
 
 
 
1,202
 
 
 
1,182
 
 
 
1,196
 
 
 
1,186
 

Technology as a service (TaaS)

 
 
315
 
 
 
321
 
 
 
353
 
 
 
322
 
 
 
311
 
 
 
307
 

Other services

 
 
509
 
 
 
420
 
 
 
956
 
 
 
632
 
 
 
103
 
 
 
83
 

Total

 
 
2,489
 
 
 
1,958
 
 
 
2,511
 
 
 
2,136
 
 
 
1,610
 
 
 
1,576
 

Adjusted EBITDA

in 000s of CAD dollars

 
 
Q12020
 
 
 
Q12020
 
 
 
Q42019
 
 
 
Q32019
 
 
 
Q22019
 
 
 
Q12019
 

Gross Profit

 
 
2,781
 
 
 
2,366
 
 
 
2,750
 
 
 
2,761
 
 
 
1,758
 
 
 
1,762
 

Adjusted EBITDA 4

 
 
556
 
 
 
358
 
 
 
676
 
 
 
743
 
 
 
200
 
 
 
322
 

Amortization

 
 
346
 
 
 
326
 
 
 
286
 
 
 
318
 
 
 
266
 
 
 
254
 

Operating profit (loss)

 
 
211
 
 
 
32
 
 
 
390
 
 
 
425
 
 
 
(66
)
 
 
68
 

4 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

Jun 30

2020

Mar 31

2020

Dec 31

2019

Sep 30

2019

Jun 30

2019

Mar 31

2019

Cash

 
 
107
 
 
 
116
 
 
 
126
 
 
 
320
 
 
 
702
 
 
 
367
 

Total current assets

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

Total current liabilities

 
 
8,901
 
 
 
7,532
 
 
 
9,035
 
 
 
8,749
 
 
 
8,625
 
 
 
6,033
 

Net working capital

 
 
(3,453
)
 
 
(3,141
)
 
 
(2,829
)
 
 
(2,643
)
 
 
(2,406
)
 
 
(927
)

Total assets

 
 
12,283
 
 
 
11,501
 
 
 
12,630
 
 
 
11,780
 
 
 
12,268
 
 
 
8,803
 

Bank debt and seller notes

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

Total shareholders' equity 3

 
 
778
 
 
 
950
 
 
 
980
 
 
 
473
 
 
 
854
 
 
 
860
 

Route1 generated net cash flow from operating activities of approximately $1.77 million during Q1 2020 compared with cash used of $0.62 million in Q1 2019. Non-cash working capital generated was $0.20 million in Q1 2020 compared to $0.39 million in cash used during the same period a year earlier. Net cash generated by the day-to-day operations for the three months ended March 31, 2020 was $0.27 million compared to $0.22 million used in Q1 2019.

Route1 generated by operating activities for the three months ended June 30, 2020 was $1.77 million compared to cash generated of $0.86 million in the same period in 2019. Non-cash working capital generated was $1.35 million for the three months ended June 30, 2020 compared to $1.07 generated in the same period a year earlier. Net cash generated by the day-to-day operations for the three months ended June 30, 2020 was $0.43 million compared to $0.21 million used in the same period in 2019.

DoD Contract Award
Route1 announced on August 24, 2020 that it had been awarded a purchase order to provide a one-year license with three one-year renewal options to an agency of the U.S. Department of Defense for 4,000 MobiKEY subscriptions.

The new client for Route1 has the ability to increase their user base in increments of 1,000 subscriptions. The annual software license for the 4,000 users is valued at approximately US $1.5 million.

As a result of this order, using today's subscriber base and assuming flat subscription growth, on a pro forma basis Route1 expects as of today's date to generate for the balance of 2020 monthly MobiKEY subscription-based revenue of approximately CAD $740,000. This is in contrast to Route1's MobiKEY application software monthly subscription revenue of approximately CAD $405,000 in February 2020.

Stock Option Grant
On August 25, 2020, the Company granted independent board directors and employees stock options in the aggregate amount of 400,000 with an exercise price equal to the closing share price on Thursday, August 27, 2020. The stock options will expire on August 26, 2025 and will vest thirty percent on the first anniversary, thirty percent on the second anniversary and the remainder on the third anniversary. Under the Company's stock option plan, 10% of the issued capital is reserved for issuance for a total of 3,369,861 options. As of today's date, including the above grant, a total of 3,232,500 options are currently outstanding under the stock option plan.

Business Update Conference Call and Webcast
The Company will hold a conference call and web cast to provide a business update on Wednesday, August 26, 2020 at 9:00 am eastern.

Participants should dial Toll-Free: 1-877-407-0782 or Toll/International: 1-201-689-8567 at least 10 minutes prior to the conference. For those unable to attend the call, a replay will be available on August 26, 2020 after 4 pm eastern at Toll-Free 1-877-481-4010 or Toll/International 1-919-882-2331, pass code #36892 until 10 am on September 9, 2020.

The webcast will be presented live at https://www.webcaster4.com/Webcast/Page/2167/36892.

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
Chief Executive Officer
+1 480 578-0287
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, price and liquidity of the common shares, expected financial performance, expected subscribers and subscription-based revenue, business prospects, technological developments, and development activities 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: 603385