Route1 Inc. (TSX VENTURE:ROI), a digital security and identity management
company whose customers include the U.S. Department of Defense, the Department
of Homeland Security, the Department of Energy, and the Government of Canada,
today announced its financial results for the three and nine month period ended
September 30, 2013.
Statement of
Operations For the Three Months Ended For the Nine Months Ended
Sep 30 Sep 30
2012 2012
(in 000s of CAD Sep 30 Sep 30 before Sep 30 Sep 30 before
dollars) 2013 2012 award 2013 2012 award
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Revenue 1,485 1,933 1,342 3,907 6,773 3,928
Cost of revenue 379 236 235 793 1,108 547
Gross profit 1,106 1,696 1,107 3,114 5,665 3,381
Operating
expenses 1,153 1,237 1,238 3,281 3,526 3,526
Stock based
compensation
expense 11 145 145 206 377 377
Operating profit
(loss) (58) 315 (276) (373) 1,762 (523)
Net profit
(loss) (63) 160 (431) (282) 1,643 (642)
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Operating results for the three and nine month period ended September 30, 2012
were positively affected by the proceeds of an arbitration award which was
received in January 2012. For additional information, please see Route1's
September 30, 2013 Financial Statements and Management's Discussion & Analysis.
Q3 2013 Financial Results Summary
For the three month period ended September 30, 2013, total revenue decreased to
$1.5 million from $1.9 million in the third quarter of 2012. The decrease was a
result of recognizing $0.6 million of services revenue from the arbitration
award during the third quarter of 2012.
Services revenue by
quarter Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
(in 000s of CAD dollars) 2013 2013 2013 2012 2012
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MobiKEY application
software revenue 1,139 1,158 853 964 954
Other services revenue 174 175 174 792 856
Total 1,313 1,333 1,027 1,756 1,810
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Gross profit decreased during the third quarter to $1.1 million compared from
$1.7 million during the same period in the prior year. The decrease in gross
profit is attributable to $0.6 million recognized from the arbitration award in
the prior year and a $0.1 million write down of MobiKEY Classic devices in the
current quarter.
Operating expenses for the three months ended September 30, 2013 were $1.15
million compared to $1.24 million for the same period in 2012. The decrease was
primarily a result of a decrease in general administration expense. Professional
fees decreased by approximately $0.1 million for the three months ended
September 30, 2013 as compared to the same period in 2012, as a result of
reducing outsourced human resource and investor relations activities.
As a result, Route1's third quarter 2013 total comprehensive net loss was $0.06
million compared to total comprehensive net income of $0.16 million during the
same period in the prior year. Adjusted earnings before interest, income taxes,
depreciation and amortization, stock-based compensation, restructuring and other
costs (Adjusted EBITDA) during the three-month period amounted to $22,000
compared to an Adjusted EBITDA of $0.5 million in the third quarter of 2012.
As at September 30, 2013, Route1 had no bank debt and a cash balance of $1.4
million.
Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
in 000s of CAD dollars 2013 2013 2013 2012 2012
----------------------------------------------------------------------------
Revenue 1,485 1,366 1,057 2,277 1,933
Adjusted EBITDA 22 (7) 9 645 514
Amortization 69 72 50 47 54
Operating profit (loss)
before stock based
compensation (47) (79) (41) 598 460
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Year-to-date 2013 Financial Results Summary
For the nine month period ended September 30, 2013, total revenue decreased to
$3.9 million from $6.8 million in the first nine months of 2012. Gross profit
also decreased for the nine month period ended September 30, 2013 to $3.1
million from $5.7 million during the same period in the prior year. The decrease
in total revenue and gross profit is primarily a result of the arbitration
award.
Operating expenses for the nine month ended September 30, 2013 were $3.3 million
compared to $3.5 million for the same period in 2012. The reduction in operating
expenses was driven by lower professional fees, an increase in the SR&ED tax
credit amount, and lower salaries and benefits costs.
As a result, Route1's year-to-date 2013 total comprehensive net loss was $0.3
million compared to total comprehensive net income of $1.6 million during the
same period in the prior year.
Route1 Receives Order for 7,000 MobiKEY Fusion Devices
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. This client
will be replacing their allotment of MobiKEY Classic devices with Route1's
MobiKEY Fusion devices. Route1 expects to ship the 7,000 devices between
September 2013 and February 2014. The award has a sales value of approximately
US $0.7 million.
During the quarter ended September 30, 2013, Route1 shipped 1,000 devices with
sales value of approximately $0.1 million.
Paid, Active Subscribers
As at September 30, 2013, Route1 had 14,642 paying, active subscribers.
MobiKEY Subscribers
(in 000s of CAD dollars Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
for Revenue) 2013 2013 2013 2012 2012
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Closing Number 14,642 14,784 13,989 15,913 14,615
Revenue per Subscriber $ 310 $ 306 $ 245 $ 259 $ 258
Revenue $ 1,139 $ 1,158 $ 853 $ 964 $ 954
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Business Development Update
On April 11, 2013 during its fiscal year 2012 investor conference call and
webcast, Route1 laid out to shareholders its business development plan. Route1
provided a further update to its plan on August 29, 2013.
Over the last 90 days the Canadian Government component of the business
development plan has materially advanced, specifically Shared Services Canada
(SSC), the program manager for Workplace Technology Devices (WTD), prior termed
Workplace Technology Services program, issued a Letter of Interest on November
4, 2013. Route1 responded on November 20, 2013 per the document requirements.
Specifics of the WTD program are as follows:
-- The WTD initiative will standardize, consolidate and re-engineer the
delivery of end user device hardware, software and associated support
services in the Government of Canada to reduce costs and increase
security for 95 organizations - http://www.ssc-spc.gc.ca/pages/devices-
appareils-eng.html.
Product Development Progress
Recent Releases
-- On October 15, 2013, the Company announced the unveiling of the MobiKEY
Fusion A2T device. The MobiKEY Fusion A2T is an advanced tool for ID-1
smart card users (CAC, PIV and FRAC) who want to use an iPad, iPad mini,
iPhone or iPod touch to access data remotely. With this announcement,
Route1 has expanded the number of mobile devices that ID-1 smart card
users can utilize to securely access data via the MobiKEY technology.
Upcoming Releases (over the next 60 days):
-- MobiKEY for iOS - Integrate third party smart card reader technology
with MobiKEY technology to offer unique hardware based multifactor
authentication for tablets.
-- MAP 2.0 - Integrate administration and provisioning tool with reports
module, feature enhancements and bug fixes.
2014 Target Releases:
-- MobiKEY technology feature addition - Audio support.
-- MobiKEY for Android.
-- Derived Credentials as per FIPS 201-2 - Level 2 to 4 credentials for
mobile devices. Leveraging TPM or SIM enabled devices. Credential
lifecycle management. Policies and authentication/authorization
assertions.
-- MAP 3.0 (Enhanced policy management) - Allow organizations to establish
and implement MobiKEY policy management with real-time implementation of
changes and group policy support.
-- EnterpriseLIVE Virtualization Orchestrator (ELVO) 3.0. Enhanced
functionality and improved integration with features available from the
virtualization provider.
-- MobiLINK 2 (TCP Protocol Suite Support) - Support for native mobile
applications.
There are also a number of additional product development projects being considered.
Product development plans are subject to change without notice, based on market
factors and/or client demands.
Forward Looking Statements
This news release contains statements that are not current or historical factual
statements that may constitute forward-looking statements. These statements are
based on certain factors and assumptions, including, expected financial
performance, 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 Route1. Actual results could differ materially from those projected as
a result of these risks and should not be relied upon as a prediction of future
events. Route1 undertakes no obligation to update any forward-looking statement
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 Route1 sources.
About Route1 Inc.
Route1 delivers industry-leading security and identity management technologies
to corporations and government agencies that require universal, secure access to
digital resources and sensitive data. These customers depend on The Power of
MobiNET - Route1's universal identity management and service delivery platform.
MobiNET provides identity assurance and individualized access to applications,
data and networks. 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.
(C) Route1 Inc., 2013. 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Route1 Inc.
Tony Busseri
CEO
+1 416 814-2635
tony.busseri@route1.com
www.route1.com
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