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Route1 Inc. TSX VENTURE: ROI 
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Route1 Reports 2008 Second Quarter Results
TORONTO, ONTARIO--(Marketwire - Aug. 22, 2008) - Route1 Inc. (TSX VENTURE:ROI), the trusted provider of security and identity management network solutions, today announced its 2008 Second Quarter financial results as at and for the three and six months ended June 30, 2008.
Revenues for the current quarter were $184,936 compared to $320,869 for the same period in the prior year. In the corresponding period in 2007, a large one-time quantity of devices were sold to one customer totaling approximately $167,000, which was offset by an increase in our service revenues, reflecting the Company's increasing subscriber base for MobiNET(TM) subscription-based service, such as TruOFFICE(TM). The cost of revenues decreased by $231,876 or 56% to $182,544 for the current quarter as compared to $414,420 for the same period in the prior year. The decrease can be mostly attributable to the large number of devices that were sold in the second quarter of 2007 as compared to 2008, plus a decrease in operating salaries and benefits as a result of a reduction in head count, and a reduction in amortization expense. Operating expenses for the current quarter were $1,704,982, a decrease of $323,745 or 16%, from $2,028,727 for the same period in the prior year. Net loss from for the current quarter was $1,680,144 or $nil per share, an improvement of $417,446, or 20%, from a net loss of $2,097,590 or $0.01 per share for the same period in the prior year.
To summarize the Company's cash flow for the current quarter: i) $1,784,040 (2007 - $2,039,936) was used for operations including $274,793 for working capital; ii) $47,037 (2007 - $74,513) was used for investing activities including $44,232 in the purchase of capital assets; and iii) $29,500 (2007 - $699,530 was generated) was used by financing activities including $29,500 in the repayment of obligations under capital lease. The cash position of the Company at June 30, 2008 was $2,816,523. As at August 22, 2008, the share capital consisted of 349,388,115 common shares.
"We believe Route1's technology continues to be unrivaled in the marketplace and we are at the beginning of an emerging trend toward greater adoption of security and identity management network solutions. Route1 remains focused on marketing and selling our solutions to governments, militaries and enterprises. Although there have been delays in tier 1 customer acquisitions, there is continued interest among these larger customers and we have realized a steady flow of smaller customer wins," said Andrew White, President and CEO, Route1 Inc.
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(in thousands of Canadian
dollars, except per share As at and for the
amounts) three months ended
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Change
June 30, June 30, ---------------
2008 2007 $ %
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STATEMENT OF OPERATIONS
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Devices $ 55 $ 250 $ (195) (78)
Services 130 71 59 83
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Total revenues 185 321 (136) (42)
Cost of revenues 183 415 232 56
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Gross margin 2 (94) 96 102
OPERATING EXPENSES
General and administrative 714 635 79 12
Research and development 543 679 (136) (20)
Selling and marketing 386 640 (254) (40)
Amortization 62 74 (12) (16)
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Loss before undernoted (1,703) (2,122) (419) (20)
Interest income 23 25 2 12
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Net loss for the period $ (1,680) $(2,097) $ (417) (20)
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Loss per share $ (0.00) $ (0.01) $ 0.01 100
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CASH FLOW INFORMATION
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Operating activities $ (1,784) $(2,040) $ 256 13
Investing activities (47) (75) 28 37
Financing activities (30) 700 (730) (104)
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Net cash inflow (outflow) (1,861) (1,415) (446) (32)
Cash, beginning of period 4,677 3,835 842 22
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Cash, end of period $ 2,816 $ 2,420 $ 396 16
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BALANCE SHEET INFORMATION AS AT
JUNE 30
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Working capital $ 3,262 $ 2,227 $ 1,035 46
Total assets $ 5,028 $ 4,847 $ 181 4
Obligation under capital lease $ 9 $ 720 $ (711) (99)
Shareholders' equity $ 3,552 $ 2,992 $ 560 19
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(in thousands of Canadian
dollars, except per share As at and for the
amounts) six months ended
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Change
June 30, June 30, ----------------
2008 2007 $ %
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STATEMENT OF OPERATIONS
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Devices $ 132 $ 544 $ (412) (76)
Services 247 185 63 34
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Total revenues 379 729 (349) (48)
Cost of revenues 359 782 423 54
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Gross margin 20 (53) 73 138
OPERATING EXPENSES
General and administrative 1,431 1,110 321 29
Research and development 1,125 1,158 (32) (3)
Selling and marketing 713 1,384 (671) (48)
Amortization 128 136 (8) (6)
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Loss before undernoted (3,377) (3,841) (463) (12)
Interest income 64 34 (31) (91)
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Net loss for the period $(3,313) $(3,807) $ (494) (13)
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Loss per share $ (0.01) $ (0.01) $ 0.00 -
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CASH FLOW INFORMATION
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Operating activities
$(3,310) $(3,608) $ 298 8
Investing activities (93) (261) 168 68
Financing activities (84) 4,802 (4,886) (102)
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Net cash inflow (outflow) (3,487) 933 (4,420) (474)
Cash, beginning of period 6,303 1,487 4,816 324
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Cash, end of period $ 2,816 $ 2,420 $ 396 16
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BALANCE SHEET INFORMATION AS AT'
JUNE 30
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Working capital $ 3,262 $ 2,227 $ 1,035 46
Total assets $ 5,028 $ 4,847 $ 181 4
Obligation under capital lease $ 9 $ 720 $ (711) (99)
Shareholders' equity $ 3,552 $ 2,992 $ 560 19
Route1 also recently reorganized its sales management functions, continuing its focus on being customer and vendor centric. As a result of this reorganization, Jeffrey Denberg, Senior Vice-President, Sales has left the Company to pursue other opportunities.
Route1 delivers award-winning security and identity management solutions to customers worldwide. These solutions provide universal, secure access to all digital resources and sensitive data. At the heart of Route1's solutions is MobiNET, a communications and service delivery platform focused on identity management and entitlement-based access to resources. Route1's patent-pending solutions are based on FIPS-140-2 cryptographic modules, and simplify the process of meeting increasingly stringent regulatory requirements around privacy and security. Headquartered in Toronto, Route1 is listed on the TSX Venture Exchange (symbol: ROI). For more information, visit www.route1.com.
This news release, required by applicable Canadian laws, and 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.
Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Route1's current expectations, estimates, forecasts and projections about the operating environment, legal environment, economies and markets in which Route1 operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different from those contemplated in forward-looking statements. Unless otherwise required by applicable securities laws, Route1 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(C)2008 All rights reserved. Route1, the Route1 Logo, Mobi, Route1 MobiKEY, Route1 TruOFFICE, Route1 PurLINK, Route1 EnterpriseLIVE, and Route1 MobiNET 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 TSX Venture Exchange has not reviewed or approved the contents of this press release and does not accept responsibility for its adequacy or accuracy.
For more information, please contact
Route1 Inc.Anthony Rzepka
EVP & CFO
(416) 848-8391
Email: ir@route1.com
Website: www.route1.com