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Thu, April 16, 2009 Route1 Inc.: Route1 Reports Fourth Quarter and Fiscal 2008 Financial Results
TORONTO, ONTARIO--(Marketwire - April 16, 2009) - [ Route1 ] Inc. ("Route1" or "the Company") (TSX VENTURE:ROI), the trusted provider of security and [ identity management ] network solutions, today announced its 2008 Fiscal Year and Fourth Quarter financial results as at and for the three months and year ended December 31, 2008.
For the year ended December 31, 2008, Route1 reported revenues of $1.2 million versus $1.1 million during the corresponding period in 2007. Deferred revenue increased by 339 percent to $1.7 million in 2008, compared to $388,337 as at December 31, 2007. Gross profit for the year amounted to $357,995 or 31 percent as a percentage of revenues, versus a deficit of $285,387 in 2007. As the Company ramps up the sales of its products and subscription-fee revenue stream, gross margin on a normalized basis is expected to substantially increase. Throughout fiscal 2008, management diligently monitored and reduced operating expenses to $5.9 million from $7.2 million, while growing revenues and deferred revenues. Net loss for the year ended December 31, 2008 amounted to $5.5 million or $0.02 per share, compared to a net loss of $7.5 million or $0.03 per share.
For the three-month period ended December 31, 2008, revenues increased by 131 percent to $332,153 compared to $143,768 for the same period in 2007. Gross profit for the three-month period was $167,017 or 50 percent as a percentage of revenues, versus a deficit of $113,516 during the fourth quarter of 2007. Operating expenses during the period were lower by 41 percent at $1.0 million versus $1.7 million during the corresponding quarter in 2007. Net loss for the three months ended December 31, 2008 was $829,535 or $nil per share, compared to a net loss of $1,856,444 or $0.01 per share for the same period in 2007. In the prior period's net loss was a one-time write-down of an investment for $74,999.
"I am pleased with our progress in building and securing a number of high value and growth relationships in the U.S. and Europe in 2008, which we expect will contribute to a rapid ramp up in sales, profits and cash flows in 2009 and beyond," said Andrew White, President and CEO, Route1 Inc. "Based on our current book of business and commitments, we will have surpassed our breakeven point and are extremely excited to move forward with our plan to accelerate revenue growth and demonstrate Route 1's earning power."
As at December 31, 2008 the Company had cash and cash equivalents amounting to $2.1 million compared to $6.3 million at December 31, 2007. On January 7, 2009 the Company announced the signing of an agreement, whereby Qwest Government Services Inc. ("Qwest") committed to purchase a minimum of 30,000 Route1 [ MobiKEY ](TM) devices along with [ TruOFFICE ](TM) subscription-based services, which is valued at approximately US$8.0 million. Under the terms of this agreement, Route 1 will book revenues and receive payments throughout 2009, with full payment of the contract value to be expected no later than January 30, 2010. As a result, the Company expects the balance sheet to gain strength by year-end; however management continues to closely manage cash flow to maintain the balance sheet and service the Company's capital requirements.
As at December 31, 2008 the share capital consisted of 350,388,115, and 392,581,348 on a basic and fully diluted basis, respectively.
(in thousands of Canadian dollars, ------------------------------------- except per share amounts) As at and for the three months ended ------------------------------------- Change Dec. 31, Dec. 31, -------------- 2008 2007 $ % ---------------------------------------------------------------------------- STATEMENT OF OPERATIONS ---------------------------------------------------------------------------- Devices $ 25 $ 46 $ (21) (45)% Services 307 98 209 214 ---------------------------------------------------------------------------- Total revenues 332 144 188 131 Cost of revenues 165 257 (92) (36) ---------------------------------------------------------------------------- Gross margin (loss) 167 (113) 280 249 ---------------------------------------------------------------------------- Operating expenses General administration 277 667 (390) (59) Research and development 409 523 (114) (22) Selling and marketing 281 424 (143) (34) Amortization 36 72 (36) (50) ---------------------------------------------------------------------------- Total operating expenses 1,003 1,686 (683) (41) ---------------------------------------------------------------------------- Loss before undernoted (836) (1,799) 963 53 Interest income 6 18 (12) (67) Write-off of investment - (75) 75 - ---------------------------------------------------------------------------- Net loss for the period $ (830) $ (1,856) $ 1,026 55 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss per share $ (0.00) $ (0.00) $ (0.00) - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CASH FLOW INFORMATION ---------------------------------------------------------------------------- Operating activities $ 548 $ (1,381) $ 1,929 Investing activities (4) (75) 71 Financing activities (9) 6,984 (6,993) ---------------------------------------------------------------------------- Net cash inflow (outflow) 535 5,528 (4,993) Cash, beginning of period 1,585 775 810 ---------------------------------------------------------------------------- Cash, end of period $ 2,120 $ 6,303 $(4,183) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- BALANCE SHEET INFORMATION AS AT DECEMBER 31 ---------------------------------------------------------------------------- Working capital $ 1,433 $ 6,196 $(4,763) Total assets $ 4,221 $ 8,325 $(4,104) Obligation under capital lease $ 3 $ 91 $ (88) Shareholders' equity $ 1,591 $ 6,652 $(5,061) (in thousands of Canadian dollars, ------------------------------------- except per share amounts) As at and for the year ended ------------------------------------- Change Dec. 31, Dec. 31, -------------- 2008 2007 $ % ---------------------------------------------------------------------------- STATEMENT OF OPERATIONS ---------------------------------------------------------------------------- Devices $ 444 $ 633 $ (189) (30)% Services 725 374 351 94 ---------------------------------------------------------------------------- Total revenues 1,169 1,007 162 16 Cost of revenues 811 1,292 (481) (37) ---------------------------------------------------------------------------- Gross margin (loss) 358 (285) 643 226 ---------------------------------------------------------------------------- Operating expenses General administration 2,387 2,334 53 2 Research and development 1,947 2,245 (298) (13) Selling and marketing 1,338 2,308 (970) (42) Amortization 214 285 (71) (25) ---------------------------------------------------------------------------- Total operating expenses 5,886 7,172 (1,286) (18) ---------------------------------------------------------------------------- Loss before undernoted (5,528) (7,457) 1,929 26 Interest income 81 68 13 19 Write-off of investment - (75) 75 - ---------------------------------------------------------------------------- Net loss for the period $(5,447) $(7,464) 2,017 27 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss per share $ (0.02) $ (0.03) $ 0.01 33% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CASH FLOW INFORMATION ---------------------------------------------------------------------------- Operating activities $(4,089) $(6,720) $ 2,631 Investing activities (100) (334) 234 Financing activities 6 11,871 (11,865) ---------------------------------------------------------------------------- Net cash inflow (outflow) (4,183) 4,817 (9,000) Cash, beginning of period 6,303 1,486 4,817 ---------------------------------------------------------------------------- Cash, end of period $ 2,120 $ 6,303 $(4,183) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- BALANCE SHEET INFORMATION AS AT DECEMBER 31 ---------------------------------------------------------------------------- Working capital $ 1,433 $ 6,196 $(4,763) Total assets $ 4,221 $ 8,325 $(4,104) Obligation under capital lease $ 3 $ 91 $ (88) Shareholders' equity $ 1,591 $ 6,652 $(5,061)
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) 2009 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.
