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Message: Route1's Q2 services revenue at $1.76-million

Route1's Q2 services revenue at $1.76-million

2016-08-03 09:46 ET - News Release

Mr. Tony Busseri reports


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


                            June 30,  March 31,   Dec. 31,  Sept. 30, June 30,
In 000s of dollars              2016      2016      2015      2015      2015

Closing number of                                                           
subscribers                   16,800    16,490    16,286    15,989    15,410
Revenue per subscriber          $383      $367      $361      $362      $353
                              ------    ------    ------    ------    ------
Subscriber revenue            $1,591    $1,496    $1,467    $1,424    $1,346
Other services revenue          $169      $152      $149      $148      $223
                              ------    ------    ------    ------    ------
Total services revenue        $1,760    $1,648    $1,616    $1,572    $1,569
                              ======    ======    ======    ======    ======

Revenue from services includes MobiKEY application software, MobiNET (DEFIMNET) platform and other appliance licensing or yearly maintenance.

Brian Brunetti, president of Route1 Inc., commented on today's news: "The subscriber base for our innovative secure access technology and resulting revenue continued to increase in the second quarter of 2016, and our business development opportunities advanced across the board during the same time frame. Cybersecurity initiatives within the U.S. government continue to create substantial deployment opportunities for our suite of patented technology solutions, as evidenced by recent MobiKEY purchase orders from the Department of Defense and the Navy Bureau of Medicine and Surgery. We have a number of upcoming technology releases on the horizon as we look to meet the evolving demands for data security from our government and enterprise customers, including the imminent launch of our MobiENCRYPT product. This is an exciting time for Route1 as we continue to grow and strengthen our balance sheet, as well as diversify our product offerings. I look forward to updating our shareholder base on material developments as they occur."

Business development highlights

Route1 continued to be engaged with clients from civilian, intelligence and defence components within the U.S. government who had strong interest in the MobiKEY technology.

  • U.S. Department of Defense -- Since November, 2015, Route1 has been working with a branch of the United States Armed Forces -- a new client for Route1 -- to set up the MobiKEY technology on an enterprise-wide contract vehicle that will allow all components of the new client to procure the MobiKEY technology. Route1 anticipates the contracting process to be complete in late third quarter 2016 or early fourth quarter 2016. Upon MobiKEY being available for procurement by the new client, Route1 expects sales in the first 90 days of 100 to 250 users and additional further growth on a monthly basis similar to the company's experience with the U.S. Department of the Navy.
  • U.S. Department of the Interior (U.S. Fish and Wildlife Service) -- Earlier this year the U.S. Department of the Interior (DOI) completed its Assessment and Authorization (A&A) process and issued an authority to operate (ATO) for the MobiKEY technology and the DEFIMNET platform that the U.S. Fish and Wildlife Service (FWS) installed at a secure DOI Data Center in March, 2015. Since the receipt of the ATO, Route1 has completed the hardening and deployment of updates to the DEFIMNET infrastructure to make it production ready for DOI personnel, transitioned the MobiKEY Fusion devices to the latest generation MobiKEY Fusion3 devices that were procured by FWS in fourth quarter 2015, and advanced procurement discussions with a number of bureaus within DOI. In parallel, FWS has deployed and integrated with the DEFIMNET VDI capabilities to support the rollout of VDI-enabled desktops to FWS's MobiKEY users. Route1 expects to see an increase in DOI users during the second half of 2016.
  • After the close of Q2 2016, Route1 received a purchase order from a component of the DOD for 2,000 MobiKEY Fusion3 devices. The devices will replace certain of the client's MobiKEY Fusion and MobiKEY Fusion2 devices. The use of MobiKEY Fusion3 devices with MobiKEY 5.1 or higher application software supports:
    • Multiple smart card readers: In environments requiring the use of a second smart card to elevate access or execution privileges (typically referred to as an ALT token), remote users can utilize a secondary MobiKEY Fusion3 device in conjunction with their ALT token to support this functionality.
    • Linux: Remote assets running Linux Mint, Fedora, Ubuntu and CentOS operating systems.
    • Bootable MobiKEY: Feature for remote assets that permit booting from an external USB device. Bootable MobiKEY is a security feature built into the MobiKEY Fusion3 and MC3 devices that provides the user the option to boot from the MobiKEY device, thus bypassing the remote asset's existing operating system.
  • Lastly, after the close of Q2 2016, Route1 received a purchase order from a component of the U.S. Navy, the Navy Bureau of Medicine and Surgery (BUMED), for 100 MobiKEY Fusion3 devices and 100 MobiKEY application software subscribers with contractual options to expand the BUMED user base to 300 subscribers. BUMED is the headquarters command for Navy Medicine, and develops policy and direction toward the patient and family care vision carried out by the U.S. Navy, U.S. Marine Corps and U.S. civilian personnel throughout the world.

Product development highlights


On Aug. 9, 2016, Route1 will release MobiENCRYPT, a new Route1 technology offering that enables a secure mobile work force by leveraging identity card-based credentials to protect government organizations from data-at-rest loss and security breaches. Part of Route1's suite of patented security solutions, MobiENCRYPT integrates with government-issued CAC and PIV identity card technology, offering true multifactor authentication for fast and seamless preboot authentication and on-the-fly encryption, allowing government employees and contractors to access their workspaces quickly, without compromising on security. It is more affordable and secure than other hardware or software-only solutions. MobiENCRYPT enables a mobile and flexible work force while protecting government-furnished equipment (GFE) from loss or theft. Once encrypted, GFE remains encrypted after local and remote log-ins by authorized personnel, while other solutions are limited to local access only.

Authentication as a service

In September, 2016, Route1 will release its first stand-alone user authentication offering. The offering will enhance authentication via mobile devices with the levels of security necessary for U.S. government. Route1's release of this offering is in response to a user shift toward greater mobility and BYOD, and the fact that physical smart cards are an inconvenience for the user when using a mobile device.

It is Route1's belief that the vendors first to the market in this space have failed to adequately assess and address risks to government information systems, data and ultimately national security.


On July 8, 2016, Route1 released MobiKEY for Android 5.0 and MobiKEY A2T for Android 5.0. MobiKEY A2T for Android 5.0 was tested on Samsung Galaxy S4, Note 3, Note Pro 12.2 and Note 10.1 running Android 4.4.

MobiKEY A2T for Android delivers full workspace access from any device, anywhere, at any time, without compromising data security. Mobile workers have the freedom to securely access their digital workspace using the most integrated secure access and multifactor authentication approach on the market. MobiKEY is cost-effective and more secure than traditional VPN-based solutions, and offers turnkey set-up and integration into any IT infrastructure. It's ideal for mobile or BYOD workers and business continuity (COOP) situations. A MobiKEY Fusion A2T device is required to run this application. Features of the technology are as follows:

  • Offers users exactly the same access remotely that they have at their office;
  • Integrates with government-issued CAC or PIV cards as part of the authentication process;
  • Your data stay within your network's perimeter;
  • Complement to an enterprise's virtual desktop infrastructure investment and a path to desktop consolidation;
  • Cross-domain technology, host assets (the one you want to access) can be on any domain or network;
  • Enterprise registration and deployment tools;
  • Integration with Active Directory;
  • Fully integrates with virtual desktop infrastructure;
  • Connection history details for auditing and reporting purposes;
  • Bandwidth efficient -- 20-kilobyte-per-second average bandwidth usage per connected user.

Route1 also has several enhancement and functionality development projects ongoing to keep MobiKEY as the most cost-effective way to enable authorized access for your mobile and local work force while maintaining the highest security standards. Planned MobiKEY application software releases for during the remainder of the calendar year are as follows:

  • MobiKEY for Android 5.1 and MobiKEY A2T for Android 5.1: support for Android 5.x and 6.x, and support for Android 4.4 and 5.x with Knox 2.x respectively.
  • MobiKEY 5.2: New desktop management protocol, support of audio in both directions.

Please note that development project plans and related release timing can be and often are influenced by new clients requirements.

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 (NCIB). 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 Aug. 1, 2016, the company had purchased a total of 12,144,000 common shares under the NCIB.

Since the first NCIB was announced on Feb. 28, 2012, Route1 has repurchased a total of 35,813,200 of its common shares, representing 9.2 per cent of Route1's common shares outstanding as at Feb. 28, 2012.

As at Aug. 1, 2016, Route1 has 353,107,414 common shares outstanding.

Q2 2016 financial results notification

Route1 will report its second quarter financial results for the period ended June 30, 2016, before the markets open on Thursday, Aug. 11, 2016.

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