Route1 Reports 2007 Third Quarter Results



    TORONTO, Nov. 28 /CNW/ - Route1 Inc.(TM) (TSX-V:ROI), the trusted
provider of security and identity management network solutions, today
announced its 2007 Third Quarter financial results as at and for the three and
nine months ended September 30, 2007.

    
    Business Highlights
    -------------------
    During and subsequent to the third quarter of fiscal 2007, Route1
announced the following significant developments:

    -   Route1 reached significant milestones in the third quarter of fiscal
        2007, including new product releases, OEM opportunities, and the
        refocusing of the sales strategy.
    -   The Company's participation at Coalition Warrior Interoperability
        Demonstration (CWID) exceeded all expectations, and led the way for
        future pilots, further testing, and strong interest in its suite of
        defense and space products and solutions.
    -   Jeffrey Denberg joined Route1 as its newly appointed Senior Vice
        President of Sales, and has repositioned the company's go-to-market
        sales strategy. Under Jeff's guidance, Route1 has positioned its
        Channel to address the burgeoning SMB market, while Route1's core
        sales team focuses on OEM, Enterprise, Government, and Military
        accounts.
    -   Route1 announced two significant OEM (original equipment
        manufacturer) type relationships. The first was with Novatel
        Wireless, a leading global provider of 3Gwireless broadband access
        solutions. This agreement will see the integration of Route1's
        subscription-based services, including TruOFFICE(TM), into the
        Novatel Wireless product line of wireless modems. The second was with
        Giesecke and Devrient (G&D), the leading global provider of
        banknotes, ID documents, and smart card solutions, and will enable
        Route1's suite of identity management subscription services, such as
        PurLINK, to be integrated into G&D's StarSign(R) product family of
        identity tokens.
    -   Route1 also announced the availability of its high assurance
        identity-based access products and services focused on securing web
        content. EnterpriseLIVE is Route1's family of high assurance
        platforms built for Financial Services, Military, Government,
        Telecommunication Service Providers, and Web 2.0 communities to
        secure systems and digital content. PurLINK, Route1's PKI-based
        authentication service, enables end-users to access and navigate web
        content secured by the EnterpriseLIVE platform. PurLINK is positioned
        to become the de-facto, trusted standard for secure access to
        portals, online systems, and applications.
    

    "These past several months have been productive for Route1 across all of
our areas of operation. I am particularly pleased with the progress that we
made in establishing our OEM alliances with partners like G&D and Novatel,"
said Andrew White, Route1's President and CEO. "Along with the changes we are
making to our sales structure, I am expecting these developments to begin
positively impacting our financial results in 2008."
    Revenues for the third quarter of fiscal 2007 were $134,778 compared to
$171,313 for the same period last year, representing a $36,535 or
21% decrease. In the quarter, the Company reorganized and restructured its
sales efforts and strategy, shifting its primary focus from an indirect
channel-driven strategy, utilizing value-added resellers, towards a
direct-to-market enterprise/government focused strategy employing a direct
sales team. This restructuring culminated in the replacement of the Company's
senior vice president of sales along with several members of the indirect
sales team, resulting in a disruption of the Company's sales efforts for the
quarter. The Company is focused on building its direct sales team in support
of its direct-to-market sales strategy.
    "Our experience of working directly with large enterprise and government
accounts confirms that our suite of products and services is well-suited to a
direct distribution model," noted White. "We expect to see a return to revenue
growth in the coming months as a result of the restructuring of our sales
team."
    Gross margin loss for the third quarter of fiscal 2007 was $118,895
compared to $176,906 for the same period last year, representing a $58,011 or
33% improvement. General and administration expenses for the third quarter of
fiscal 2007 were $556,873 compared to $619,540 for the same period last year,
representing a $62,667 or 10% decrease. Research and development expenditures
for the third quarter of fiscal 2007 were $564,098 compared to $483,522 for
the same period last year, representing an $80,576 or 17% increase. Selling
and marketing expenditures for the third quarter of fiscal 2007 were $500,453
compared to $878,740 for the same period last year, representing a $378,287 or
43% decrease. Net loss for the third quarter of fiscal 2007 was $1,801,447 or
$0.01 per share compared to $2,217,083 or $0.01 per share for the same period
last year, representing a $415,636 or 19% improvement.
    Cash and cash equivalents decreased by $1,644,647 to $775,039 as at
September 30, 2007 from $2,419,686 as at June 30, 2007 or decreased by
$711,325 to $775,039 from $1,486,364 as at December 31, 2006. The Company has
recently completed private placement that resulted in gross proceeds of
$7,766,480. Total Assets decreased to $2.9 million from $5.9 million a year
earlier. This includes cash and cash equivalents of $0.8 million. As at
November 28, 2007, the share capital consisted of 349,388,115 common shares
outstanding.



    
                           --------------------------------------------------
                                           As at and for the
                                           three months ended
                           --------------------------------------------------
    (in thousands of
     dollars, except                                           Change
     for per share             Sep 30,      Sep 30,    ----------------------
     amounts)                    2007         2006            $            %
                           --------------------------------------------------
                           --------------------------------------------------
    STATEMENT OF
     OPERATIONS
    Revenues                  134,778      171,313      (36,535)      (21.3%)
    Cost of revenues          253,673      348,219      (94,546)      (27.2%)
                           --------------------------------------------------
    Gross margin (loss)      (118,895)    (176,906)      58,011        32.8%
                           --------------------------------------------------
    Operating Expenses
    General administration    556,873      619,540      (62,667)      (10.1%)
    Research & development    564,098      483,522       80,576        16.7%
    Selling and marketing     500,453      878,740     (378,287)      (43.0%)
    Amortization               75,906       68,296        7,610        11.1%
                           --------------------------------------------------
                            1,697,330    2,050,098     (352,768)      (17.2%)
                           --------------------------------------------------
    Loss before the
     following items       (1,816,225)  (2,227,004)     410,779        18.4%
    Interest income            14,778        9,921        4,857        49.0%
                           --------------------------------------------------
    Loss from continuing
     operations            (1,801,447)  (2,217,083)     415,636        18.7%
    Income (loss) from
     discontinued
     operations                     -            -            -            -
    Net loss and
     comprehensive
     loss for the period   (1,801,447)  (2,217,083)     415,636        18.7%
                           --------------------------------------------------
                           --------------------------------------------------
    Loss per share              (0.01)       (0.01)           -            -

    CASH FLOW INFORMATION
    Operations (including
     non-cash working
     capital changes)      (1,730,006)  (2,181,403)
    Investing                     443      (90,536)
    Financing                  84,916    4,686,532
                           ------------------------
    Net cash flow          (1,644,647)   2,414,593
    Cash and cash
     equivalents
      Beginning of period   2,419,686    1,520,129
                           ------------------------
      End of period           775,039    3,934,722
                           ------------------------
                           ------------------------

    BALANCE SHEET
     INFORMATION
    Working capital           802,794    3,786,248
    Total assets            2,930,808    5,920,397
    Shareholders' equity    1,442,842    4,539,439


                           --------------------------------------------------
                                           As at and for the
                                           nine months ended
                           --------------------------------------------------
    (in thousands of
     dollars, except                                           Change
     for per share             Sep 30,      Sep 30,    ----------------------
     amounts)                    2007         2006            $            %
                           --------------------------------------------------
                           --------------------------------------------------
    STATEMENT OF
     OPERATIONS
    Revenues                1,030,656      452,129      578,527       128.0%
    Cost of revenues        1,117,536    1,154,663      (37,127)      (93.2%)
                           --------------------------------------------------
    Gross margin (loss)       (86,880)    (702,534)     615,654        87.6%
                           --------------------------------------------------
    Operating Expenses
    General administration  1,667,073    1,970,680     (303,607)      (15.4%)
    Research & development  1,721,714    1,688,510       33,204         2.0%
    Selling and marketing   1,884,645    1,966,601      (81,956)       (4.2%)
    Amortization              211,931      236,620      (24,689)      (10.4%)
                           --------------------------------------------------
                            5,485,363    5,862,411     (377,048)       (6.4%)
                           --------------------------------------------------
    Loss before the
     following items       (5,572,243)  (6,564,945)     992,702        15.1%
    Interest income            49,258       35,668       13,590        38.1%
                           --------------------------------------------------
    Loss from continuing
     operations            (5,522,985)  (6,529,277)   1,006,292        15.4%
    Income (loss) from
     discontinued
     operations                     -      457,000     (457,000)           -
                           --------------------------------------------------
    Net loss and
     comprehensive
     loss for the period   (5,522,985)  (6,072,277)     549,292         9.0%
                           --------------------------------------------------
                           --------------------------------------------------
    Loss per share              (0.02)       (0.02)           -            -

    CASH FLOW INFORMATION
    Operations (including
     non-cash working
     capital changes)      (5,338,180)  (5,818,715)
    Investing                (260,093)    (210,243)
    Financing               4,886,948    9,125,318
                           ------------------------
    Net cash flow            (711,325)   3,096,360
    Cash and cash
     equivalents
      Beginning of period   1,486,364      838,362
                           ------------------------
      End of period           775,039    3,934,722
                           ------------------------
                           ------------------------

    BALANCE SHEET
     INFORMATION
    Working capital           802,794    3,786,248
    Total assets            2,930,808    5,920,397
    Shareholders' equity    1,442,842    4,539,439
    


    About Route1 Inc.

    Route1 is the trusted provider of security and identity management
network solutions that are redefining today's digital landscape. 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. Leveraging the power of MobiNET is the award-winning MobiKEY, an
ultra-portable computing device that securely connects users to the myriad of
MobiNET services from any Internet-enabled Windows-based PC. This
patent-pending computing solution is embedded on a smart-card enabled,
cryptographic USB device, making it one of the most powerful and easy-to-use
secure computing solutions available today. MobiKEY enables users to connect
to their desktop data, applications, network resources, and web content with
services such as TruOFFICE and PurLINK. Route1's patent-pending solutions,
based on FIPS-140-2 cryptographic modules, meet the stringent security needs
and high standards mandated by all levels of government. They have been
evaluated by ICSA Labs and certified by the CSE. As a Company with high regard
for intellectual property, Route1 continues to encourage and nurture
innovation across its talented team. Headquartered in Toronto, Route1 is
listed on the TSX Venture Exchange (symbol: ROI) and has offices and agents
worldwide. For more information, visit www.route1.com.

    This news release 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.

    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.

    (C)2007 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.

    %SEDAR: 00008444E




For further information:

For further information: Investor Relations: Anthony Rzepka, Executive
Vice President and Chief Financial Officer, Tel: (416) 848-8391, Email:
ir@route1.com

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