2019-11-26 08:13 ET - News Release

An anonymous director reports

ROUTE1 ANNOUNCES Q3 2019 FINANCIAL RESULTS

Route1 Inc. has provided its third quarter (Q3) financial results for the period ended Sept. 30, 2019.

Q3 2019 Financial ResultsStatement of operations
In 000s of CAD dollars
                                             Q32019Q22019 Q12019 Q42018 Q32018Q22018
Revenue                                                                             
Subscription and services                     2,136 1,610  1,576  1,628  1,684 1,633
Devices and appliances                        6,576 1,819  1,883  2,440 13,207 3,936
Other                                             2     1      3      6      4     7
Total revenue                                 8,714 3,430  3,462  4,074 14,895 5,577
Cost of revenue                               5,953 1,672  1,700  2,216 12,311 3,620
Gross profit                                  2,761 1,758  1,762  1,858  2,584 1,957
Operating expenses                            2,335 1,824  1,693  1,714  2,150 1,891
Operating profit (loss) 1                       426   (66)    69    144    434    65
Total other expenses 2, 3                       425   488    581    499    246    52
Net income gain (loss)                            1  (554)  (513)  (355)   188    13

1 Before stock-based compensation

2 Includes stock-based compensation, AirWatch litigation, gain on acquisition and foreign exchange

3 The reimbursements received from Bench Walk pursuant to its investment have, based on advice of its auditors, been accounted for as a long-term non-monetary liability within the consolidated financial statements, not as a reduction to patent litigation expense. All such amounts are non-recourse to the Company. In connection with the terms of the agreement, the Company does not have a present obligation to pay any amounts until such time as the litigation has been settled or an event of default has occurred. In the event of an award or settlement of the litigation, the Company will be obligated to pay Bench Walk the greater of 10% of such award or settlement and $2,000,000 or $3,000,000 if the litigation proceeds to trial.

Subscription and services revenue
in 000s of CAD dollars                                 Q32019Q22019Q12019Q42018Q32018Q22018
Application software                                    1,182 1,196 1,186 1,169 1,193 1,180
Technology as a service (TaaS)                            322   311   307   329   289   266
Other services                                            632   103    83   130   203   186
Total                                                   2,136 1,610 1,576 1,628 1,684 1,633

Route1 generated net cash flow from operating activities of approximately $0.43 million during Q3 2019 compared with $0.43 million in Q3 2018. Non-cash working capital used was $0.41 million in Q3 2019 compared to $0.97 million in cash generated during the same period a year earlier. Net cash generated by the day-to-day operations for the three months ended September 30, 2019 was nil compared to $1.40 million in Q3 2018.

Normal Course Issuer Bid (NCIB)

For the three months ended September 30, 2019, the Company purchased 1,179,900 shares for cancellation under the NCIB at an average price of approximately $0.395 per share. For the nine months ended September 30, 2019, the Company purchased 1,257,100 shares for cancellation under the NCIB at an average price of approximately $0.403 per share.

PCS Mobile Acquisition

On June 28, 2019, Route1 acquired Portable Computer Systems, Inc. ("PCS Mobile"). The Company completed the purchase of PCS Mobile for total consideration of US $2.5 million. PCS Mobile is a computer reseller with expertise in mobile data applications, including wireless products for in-vehicle use. The company offers guidance and state-of-the-art mobile devices for a wide range of applications including utilities, telecommunications, field services, insurance, healthcare, Fire/EMT, police and public safety - as well as state and local government.

Based in Denver, Colorado, PCS Mobile services customers primarily located in the Southwestern and Rocky Mountain regions of the U.S. Rugged devices and applications include but are not limited to Panasonic Toughbook mobile computers, Xplore and Getac rugged tablets, Genetec license plate recognition solutions, and accessories from Gamber-Johnson and Havis.

Q3 Financial Results Conference Call and Webcast

Route1 will hold a conference call and web cast to discuss the Company's financial results and provide a business update on Tuesday, November 26, 2019 at 9 a.m. eastern. Participants should dial Toll-Free: 1-844-369-8770 or 1-862-298-0840 at least 10 minutes prior to the conference. For those unable to attend the call, a replay will be available 1-877-481-4010 or 1-919-882-2331, pass code 56854 until 9:00 am on Tuesday, December 10, 2019.

The webcast will be presented live at www.investornetwork.com/event/presentation/56854.

Annual General and Special Meeting Notification

Route1 will hold its annual general and special meeting ("AGM") at the offices of Fasken Martineau DuMoulin LLP, 333 Bay Street, Suite 2400, Toronto, Ontario on December 2, 2019 at 9 a.m. (Toronto time) for the following purposes:to receive the comparative audited consolidated financial statements of the Corporation for the financial year ended December 31, 2018, together with the report of the auditors thereon;to elect directors of the Corporation for the ensuing year;to appoint Grant Thornton LLP, as Auditor for the ensuing year and to authorize the directors to fix their remuneration;to re-approve the stock option plan of the Corporation; andto transact such other business as may properly come before the Meeting or any adjournment thereof.

There will not be a management presentation at the end of the AGM.

About Route1 Inc.

Route1 Inc., also operating under the tradenames GroupMobile and PCS Mobile is an advanced North American technology company that empowers their clients with data-centric solutions necessary to drive greater profitability, improve operational efficiency and gain sustainable competitive advantages, while always emphasizing a strong cybersecurity and information assurance posture. Route1 delivers exceptional client outcomes through real-time secure delivery of actionable intelligence to decision makers, whether it be in a manufacturing plant, in-theater or in a university parking lot. Route1 is listed on the OTCQB in the United States under the symbol ROIUF and in Canada on the TSX Venture Exchange under the symbol ROI. For more information, visit: www.route1.com.For More Information, Contact:Tony BusseriChief Executive Officer+1 416 509 [email protected]