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Message: Route1 has 16,286 active subscribers at Dec. 31

Route1 has 16,286 active subscribers at Dec. 31

2016-01-28 11:08 ET - News Release

Mr. Tony Busseri reports

ROUTE1 PROVIDES Q4 OPERATIONS UPDATE

Route1 Inc. has provided an update on market drivers, its operations and business development activity.

MobiKey paid, active subscribers

As at Dec. 31, 2015, Route1 had 16,286 paying, active subscribers.

 

Paid, active         Closing  Quarterly    Quarterly    Quarterly  Quarterly
 subscribers      subscriber subscriber      average   subscriber subscriber
                       count     growth  revenue per      revenue    revenue
                                  count   subscriber                  growth

Dec. 31, 2015         16,286        297         $361   $1,466,000    $42,000
Sept. 30,                                                               
2015                  15,989        579         $362   $1,424,000    $78,000
June 30, 2015         15,410        398         $353   $1,346,000    $94,000
March 31, 2015        15,012        220         $334   $1,252,000    $31,000
Dec. 31, 2014         14,792        147         $334   $1,221,000    $10,000
Sept. 30,                                                               
2014                  14,645        184         $332   $1,211,000    $26,000

"The fourth quarter was another good quarter for Route1, especially as this is seasonally a weaker quarter for user growth within the U.S. government. Growth in the quarter principally came from the U.S. Navy," said Tony Busseri, Route1's chief executive officer. "We continue to build and strengthen our relationship with the prime contractor, and have dedicated meaningful additional sales and marketing resources to support the expansion of this account."

Business development highlights

Last week's historic and powerful winter snowstorm that hit much of the northeastern United States reinforced the important role Route1 has within the U.S. government to deliver secure mobile access for government employees and contractors accessing enterprise data, tools and resources by leveraging their office computer from a remote location as a matter of necessity or preference. Route1 realized very strong usage for its MobiKey technology from its U.S. government customer base, the Department of Defense, and numerous civilian departments and agencies.

"Several of our government customers requested MobiKey usage statistics, some as frequently as hourly. MobiKey enabled U.S. government employees and contractors to be fully productive in spite of weather-related government shutdowns spanning a five-day period," said Brian Brunetti, Route1's president. "Our service delivery platforms, MobiNet and DefimNet, are built to operate in a high-availability, fully redundant fashion so that they can operate at full capacity even with the failure of any single component, without impact to concurrency or capacity. The infrastructure has been designed to support capacities larger than currently being utilized by our existing customers. Further, it is architected in a way that every component is easily scalable to support increased demand."

Route1 has continued to see strong interest in its MobiKey technology from civilian, intelligence and defence components within the U.S. government.

  • U.S. Department of the Interior (U.S. Fish and Wildlife Service):
    • As announced on Jan. 14, 2016, the U.S. Department of the Interior, after completing its accreditation process, issued an authority to operate for the MobiKey technology and the DefimNet platform that the U.S. Fish and Wildlife Service installed at a secure DOI hosting facility in March, 2015. Over the past two weeks Route1 has been working with FWS to harden and deploy updates to the DefimNet infrastructure to bring it fully on-line, and is in the process of swapping out MobiKey Fusion devices for the latest generation MobiKey Fusion3 devices that were procured by FWS in the fourth quarter of 2015.
  • U.S. Office of Personnel Management:
    • The reported June, 2015, data breaches at the Office of Personnel Management brought needed attention to the lack of full compliance with two-factor authentication policy (HSPD-12), the use of unaccredited technology within government networks and failure to properly protect data at rest within certain components of the U.S. government. It also has created a driver for civilian components to reconsider their approach to secure mobile access and authentication. Route1 has had renewed interest in the MobiKey technology from the Office of the CIO with the Department of Commerce; a number of components with the Department of Agriculture have engaged Route1 in the potential use and procurement of MobiKey; and, most recently, Route1 advanced an active pilot with the Transportation Security Administration, a component of the U.S. Department of Homeland Security.
  • U.S. Department of Defense:
    • Route1 continues to benefit from growing awareness of MobiKey within the U.S. Department of Defense. During the 2015 current calendar year, Route1 worked with a number of groups within the U.S. Air Force, the U.S. Marine Corps and a component of the U.S. Army that is leading a certificate of networthiness accreditation process to use the MobiKey technology on the U.S. Army network.

Route1 expects that these and other civilian and DOD proof of concepts and pilots may lead to further paid user adoption of the MobiKey technology in 2016 and beyond. If and when procurement occurs, it will most likely follow past Route1 experiences of initial orders in the tens or hundreds of users followed by user growth over time.

Upcoming business development events

  • GSA, FAA, HUD, Department of Energy Technology and Vendor Expo -- Feb. 3, 2016 -- L'Enfant Plaza, Washington;
  • Marine West 2016 -- Feb. 3 to Feb. 4, 2016 -- Marine Corps Base Camp, Pendleton, Calif., booth 505;
  • AFCEA West 2016 -- Feb. 17 to Feb. 19, 2016 -- San Diego, Calif., booth 1443.

Product development update

Route1 technology releases during the fourth quarter of 2015 and the first three weeks of calendar 2016 are shown in the associated table.

Technology          
release             Attributes                                           Description

MobiKey 5.0           Bootable         a new security feature built into the MobiKey
                       MobiKey                 Fusion3 and MobiKey Classic 3 devices
                                      that provides the user the option to boot from
                                             the MobiKey device; bypasses the remote
                                                   asset's existing operating system
                Secure storage              a new feature that provides an encrypted
                                         partition available for secure file storage
                                             on the MobiKey Fusion3 and MC3 devices,
                                        encrypted to the user's PIV, CAC or embedded
                                            smart card; the encrypted partition only
                                                 becomes accessible after successful
                                                                      authentication
                 Remote assets         added Linux support using the MobiKey Fusion3
                     operating              and MC3 devices; Linux operating systems
                system support            supported include Mint, Fedora, Ubuntu and
                                                                             CentOS;
                                         extended Mac OS X 10.11 El Capitan support;
                                       Mac OS X operating systems supported include:
                                                 10.7 Lion, 10.8 Mountain Lion, 10.9
                                              Mavericks, 10.10 Yosemite and 10.11 El
                                                                            Capitan;
                                                extended Windows 10 support; Windows
                                        operating systems supported include: Windows
                                         XP (32 bit), Windows Vista (32 and 64 bit),
                                          Windows 7, 8.0, 8.1 and 10 (32 and 64 bit)
                   Host assets                  extended Windows 10 support; Windows
                 audio support          operating systems supported include: Windows
                                        Vista (32 and 64 bit), Windows 7, 8.1 and 10
                                         (32 and 64 bit), Windows Server 2008 R2 (64
                                               bit), Windows Server 2012 R2 (64 bit)
                  Remote audio                  added remote audio support for users
                       support          connecting from remote assets using Mac OS X
                   enhancement         10.10 or higher Mac OS X operating systems to
                                         host assets with the MobiNet Agent software
                                                               Version 5.0 installed
                                         remote audio support was first promoted for
                                         MobiKey 4.4 users connecting from a Windows
                                                                        remote asset
                      Internet          added IPv6 is the most recent version of the
                      protocol                 Internet protocol, the communications
                     Version 6          protocol that provides an identification and
                       support         location system for computers on networks and
                                                  routes traffic across the Internet
                         Other                      other bug fixes and enhancements
MobiKey 5.1     Multiple smart               for environments requiring the use of a
                  card readers                second smart card to elevate access or
                       support            execution privileges, remote users can now
                                           use a secondary MobiKey Fusion3 device to
                                                         support this functionality;
                                            this feature is available on the Windows
                                             versions that MobiKey supports with the
                                              exception of Vista on the host assets;
                                       both the MobiKey application software and the
                                       MobiNet Agent software must be at Version 5.1
                                                                           or higher
Map 3.0          Improved user              MobiNet administration and provisioning;
                   experience,            a Web-based portal and suite of tools that
                 bug fixes and                allows IT administrators to provision,
                         other          monitor and manage the identity, entitlement
                  enhancements            and services of subscribers to the MobiNet
                                                                           platform;
                                            this simple-to-use administration system
                                           enables organizations to cost-effectively
                                          manage large-scale deployments of Route1's
                                                                           solutions


      EXPECTED ROUTE1 TECHNOLOGY RELEASES DURING THE FIRST QUARTER OF 2016

Technology release                              Attributes    Target release date

MobiKey 5.0 for iOS                          support iOS 9        before Feb. 28,
                                               improved UX                   2016
                          bug fixes and other enhancements
MobiKey 5.0 for                                improved UX       before March 31,
Android                   bug fixes and other enhancements                   2016
MobiEncrypt                full disk encryption technology       before March 31,
                                 that encrypts the Windows                   2016
                         operating system leveraging smart
                                    card-based credentials
                           the MobiKey Fusion3 device will
                         leverage government issued PIV or
                        CAC credentials to enhance HSPD-12
                                   and FIPS-201 compliance
                                         features: preboot
                             authentication, key recovery,
                           identification of non-encrypted
                            assets, remote key revocation,
                         UEFI with GPT and transparent FDE

Route1 also has a number of additional continuing development initiatives that for competitive reasons it cannot disclose to the marketplace at this time. The new technologies centre around a current Route1 core competency -- public key infrastructure-based mutual authentication (a fundamental component to achieving a high level of assurance in communication), life cycle management of credentials and access to data.

One area of focus for Route1 will be to make mobility less cumbersome, but not less secure. As Major General Sarah Zabel, the Defense Information Systems Agency's vice-director, communicated at an AFCEA mobile technology event held last week in Washington, DISA plans on using derived credentials that are stored on the mobile device. PKI is at the core of derived credentials and Route1 plans on bringing to market its own derived credential offering in calendar 2016.

Share repurchase program

On Sept. 22, 2015, the company announced with approval from the TSX Venture Exchange its intention to make a normal course issuer bid. The NCIB permits the company to purchase for cancellation up to 5 per cent of the common shares in the public float. The maximum number of shares allowed for repurchase is 18,262,570. Purchases under the NCIB commenced Sept. 27, 2015, and will end Sept. 26, 2016, or the date upon which the maximum number of common shares have been purchased by the company. As of Dec. 31, 2015, the company has purchased a total of 2,592,000 common shares under the NCIB.

Since the first NCIB was announced on Feb. 28, 2012, Route1 has repurchased a total of 26,261,200 of its common shares, representing 6.8 per cent of Route1's common shares outstanding as at Feb. 28, 2012.

© 2016 Canjex Publishing Ltd. All rights reserved.

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