News Column

Route1 Reports 2014 Second Quarter Financial Results

August 12, 2014

TORONTO, ONTARIO--(Marketwired - Aug. 12, 2014) - Route1 Inc. (TSX VENTURE:ROI), a leading provider of secure access technologies for the mobile workspace that protects businesses and government agencies, 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 announced its financial results for the second quarter and year-to-date (YTD) financial results for the period ended June 30, 2014.

For Q2 2014, total revenue increased to $1.40 million from $1.37 million in Q2 2013. Gross profit also increased during the second quarter of 2014 to $1.17 million or 84% of revenue compared to gross profit of $1.14 million or 84% of revenue in Q2 2013.

Total Revenue Q2 Q2 YTD YTD in 000s of CAD dollars 2014 2013 2014 2013



------------------------------------------------

Devices 30 33 491 63 Services 1,374 1,333 2,655 2,360 Other - - 14 -



------------------------------------------------

Total Revenue 1,404 1,366 3,160



2,423

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The increase in revenue and gross profit when comparing the first six months of 2014 to the first six months of 2013 is attributable to the sale of 7,000 MobiKEY Fusion devices to a component of the U.S. Department of Homeland Security, 4,000 of which were delivered in the first quarter of 2014, and the purchase of the MobiKEY application software service by a second component of the United States Department of Defense.

Route1's Q2 2014 total comprehensive net loss was $0.03 million compared to $0.07 million during the same period in 2013. Route1's YTD 2014 total comprehensive net income was $0.41 million compared to a comprehensive net loss of $0.22 million during the same period of 2013

Earnings before interest, tax, depreciation, and amortization (Adjusted EBITDA) during the second quarter of 2014 amounted to approximately $120,000 as compared to $(7,000) in Q2 2013.

Adjusted EBITDA Jun 30 Mar 31 Dec 31 Sept 30 June 30 in 000s of CAD dollars 2014 2014 2013 2013 2013



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Revenue 1,404 1,756 1,525 1,485 1,366 Adjusted EBITDA 120 564 48 22 (7) Amortization 94 95 70 69 72



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Operating profit (loss) before stock

based compensation 26 469 (22) (47)



(79)

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During the second quarter of 2014, Route1 generated cash flow from operating activities of $3.28 million. As at June 30, 2014, the Company had no bank debt and a cash balance of $3,594,924.

Balance Sheet Extracts Jun 30 Dec 31 Jun 30 in 000s of CAD dollars 2014 2013 2013



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Cash 3,595 700 2,582 Total current assets 4,367 1,588 3,733 Total current liabilities 3,992 1,715 3,857 Net working capital 375 (127) (124) Total assets 5,085 2,387 4,587 Bank debt 0 0 0 Total liabilities 4,085 1,854 3,994



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Paid, Active Subscribers

As at June 30, 2014, Route1 had 14,461 paying, active subscribers, an increase of 221 users over the previous quarter. During Q2 2014 Route1's average revenue per subscriber was $329, an increase of $23 per subscriber or 8% from the same period in 2013.

Revenue from Subscribers Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 in 000s of CAD dollars 2014 2014 2013 2013 2013



---------------------------------------------

Closing number of subscribers 14,461 14,240 14,602 14,642 14,784 Average number of subscribers 14,401 14,198 14,600 14,697 15,159 Revenue per subscriber $ 329$ 312$ 301$ 310$ 306 Subscriber Revenue $ 1,185$ 1,108$ 1,100$ 1,139$ 1,158



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The net increase in MobiKEY application software users is a result of organic growth from accounts within the U.S. Department of Defense. Route1 expects further organic growth from these same accounts in Q3 2014.

Route1 also realized revenue growth of $17 per subscriber in Q2 2014 compared to Q1 2014 as a result of an improved U.S. dollar exchange rate at the time of renewing its two largest accounts, both with the U.S. government, between March 15, 2014 and April 30, 2014.

Business Development

Route1 has been leveraging U.S. government reciprocity rules and the installed accredited infrastructure to grow the number of proof of concepts within the U.S. Department of Defense (DOD). As a result, Route1 expects that as it continues to works towards closing large, enterprise deals, there will also be smaller account purchases from DOD components that will drive increased subscription revenue.

The Company has also continued to invest business development resources in the Canadian federal government and selective commercial enterprise opportunities. Route1 remains cautiously optimistic that the Canadian federal government is moving towards an IT security model that is more closely aligned to Route1's view of best security practices: keeping data behind enterprise firewalls, and the use of smart-card based, multi-factor authentication.

Brian Brunetti, Route1 President, noted, "The July 2014 reported breach of Canada'sNational Research Council network by a Chinese state-sponsored actor, according to a statement issued by the office of the Canadian government's CIO, highlights why government and enterprises need to act now to build secure IT infrastructure that moves beyond dated enterprise mobility approaches like VPNs to address today's user demands in a cost sensitive environment."

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 effectively 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.

(C) 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, and the MobiKEY, MobiKEY Classic, MobiKEY Classic 2 and MobiKEY Fusion devices are protected by copyright, international treaties, and various patents, including Route1's U.S. Patents 7,814,216 and 7,739,726, Canadian Patent 2,578,053, and other patents pending. The MobiKEY Classic 2 is also protected by U.S. Patents 6,748,541 and 6,763,399, and European Patent 1001329 of Aladdin Knowledge Systems Ltd. and used under license. Other patents are registered or pending in various countries around the world.

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.comwww.route1.com Source: Route1 Inc.


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Source: Marketwire (Canada)


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