Route1 Inc.: Route1 Announces Q2 2021 Financial Results

TORONTO, ON / ACCESSWIRE / August 25, 2021 / Route1 Inc. (OTCQB:ROIUF) and (TSXV:ROI) (the "Company" or "Route1"), an advanced North American provider of data-centric business empowerment solutions, today reported its financial results for the three and six-month periods ended June 30, 2021.

The Company's operating results for Q2 2021 with comparatives are as follows:

Statement of operations In 000s of CAD dollars			Q22021				Q12021				Q42020				Q32020				Q22020				Q12020
Revenue
Subscription and services			2,671				2,758				2,528				2,599				2,489				1,958
Devices and appliances			3,663				3,786				4,637				6,523				4,477				4,401
Other			4				67				62				25				3				4
Total revenue			6,338				6,611				7,227				9,147				6,969				6,363
Cost of revenue			3,443				3,647				4,315				6,134				4,188				3,997
Gross profit			2,895				2,964				2,912				3,013				2,781				2,366
Operating expenses			2,451				2,542				2,469				2,562				2,570				2,334
Operating profit 1			444				422				443				451				211				32
Patent litigation 2 Total other expenses 3			0	(17)			0284				1,058321				381598				67204				104111
Net income (loss)			461				138				(936	)			(528	)			(60	)			(183	)

¹ Before stock-based compensation

² For FY 2020, the Company incurred expenses for patent litigation net of the reversal of an accounting liability reflecting the funds the Company received from its litigation funding agreement. The Company has concluded the litigation with VMWare in both Canada and the United States and will incur no additional expense for this litigation.

³ Includes gain on litigation, gain or loss on asset disposal, stock-based compensation expense, interest expense, income tax recovery, foreign exchange loss or gain, other expenses and acquisition expense.

Subscription and services revenue in 000s of CAD dollars			Q22021				Q12021				Q42020				Q32020				Q22020				Q12020
Application software			1,724				1,977				2,015				1,923				1,665				1,217
Technology as a service (TaaS)			435				293				204				241				315				321
Other services			512				488				309				435				509				420
Total			2,671				2,758				2,528				2,599				2,489				1,958

Adjusted EBITDA in 000s of CAD dollars			Q22021				Q12021				Q42020				Q32020				Q22020				Q12020
Gross Profit			2,895				2,964				2,912				3,013				2,781				2,366
Adjusted EBITDA 4			760				764				768				778				556				358
Amortization			316				342				325				327				346				326
Operating profit (loss)			444				422				443				451				211				32

Trailing 12 Months Adjusted EBITDA in 000s of CAD dollars			Q22021				Q12021				Q42020				Q32020				Q22020				Q12020
Adjusted EBITDA 4			3,070				2,865				2,459				2,368				2,332				1,977

⁴ Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, stock-based compensation, patent litigation, restructuring and other costs. Adjusted EBITDA does not have any standardized meaning prescribed under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA allows Route1 to compare its operating performance over time on a consistent basis.

Balance sheet extracts In 000s of CAD dollars		Jun 30 2021				Mar 31 2021				Dec 31 2020				Sep 30 2020				Jun 30 2020				Mar 31 2020
Cash			165				513				1,137				-				107				116
Total current assets			5,008				5,357				6,408				8,836				5,448				4,391
Total current liabilities			9,095				9,887				9,779				13,385				8,901				7,532
Net working capital			(4,087	)			(4,530	)			(3,371	)			(4,549	)			(3,453	)			(3,141	)
Net working capital (adjusted for contract liability)			(1,263	)			(853	)			256				490				800				(1,570	)
Total assets			13,739				14,386				14,176				15,749				12,283				11,501
Bank debt and seller notes			1,839				1,728				1,792				2,609				1,193				2,461
Total shareholders' equity			2,906				2,443				2,141				37				778				950

Net cash flow In 000s of CAD dollars			Q22021				Q12021				Q42020				Q32020				Q22020				Q12020
Cash generated (used) in operating activities			(125	)			1,266				(3,513	)			1,523				1,773				472
Cash used in investing activities			(110	)			(1,700	)			906				(489	)			(240	)			(633	)
Cash generated (used) in financing activities			(142	)			(211	)			1,601				1,092				(1,543	)			165
Net cash inflow (outflow)			(377	)			(645	)			(1,008	)			2,126				(10	)			4

Q2 2021 Material Events

• On March 29, 2021, Route1 announced that it had acquired DataSource Mobility, LLC and its wholly owned subsidiary, VetSource Mobility, LLC (collectively "DSM"). Founded in 2007, DSM is primarily a reseller of ruggedized tablets and laptops along with associated accessories. DSM offers mobile devices to a wide range of sectors including public safety, utilities, field services, logistics and healthcare as well as state and local governments. DSM serves markets in the Southeastern United States including Alabama, Missouri, Tennessee and Texas. Route1 paid U.S. $1.3 million in cash at closing to acquire DSM and did not assume any debt.

Route1 also agreed to share with DSM's prior owners the gross profit generated by defined DSM accounts once the actual gross profit exceeds a threshold for the balance of the 2021 calendar year and 2022 calendar year. The threshold is U.S. $375,000 for the last nine months of 2021 and U.S. $500,000 for calendar year 2022.

In millions of US dollars		FY 2019				FY 2020
Revenue		$	4.21			$	5.10
Gross Profit		$	0.40			$	0.49

Note: The numbers presented above are unaudited. DSM's fiscal year end is December 31^st.

Route1 acquired DSM to (a) accelerate our planned expansion of its business model into Texas, a strong and growing market, (b) grow our key enterprise and public safety accounts in the energy, logistics and local government sectors, (c) provide us with the opportunity to add to the size and quality of our sales team, and (d) leverage DSM's current and future sales of rugged mobile devices to expand Route1's profitable field service installation business providing customers with end-to-end service including configuration, asset tagging and vehicle installation.

• On June 1, 2021, the Company announced that it had received US$438,642 from its insurers, in full settlement for the cost of goods fraudulently taken from Route1 in the third quarter of 2020 and disclosed in a news release Route1 issued on November 25, 2020.
• On June 28, 2021, the Company announced that it had received an order for 197 state-of-the-art Automatic License Plate Recognition ("ALPR") systems that will be deployed in patrol vehicles. The revenue to be generated by Route1 from the 197 ALPR systems purchase order is approximately US $1.3 million and will be recognized as the ALPR systems are delivered to the client which is expected to start in the third quarter of 2021.

Share Capital Update
As of August 23, 2021, Route1 has outstanding: 39,709,463 common shares; 3,574,411 common share purchase warrants expiring June 16, 2022 with a Canadian dollar $1.00 strike price; and 3,477,500 common share stock options.

Business Update Conference Call and Webcast
The Company will hold a conference call and web cast to provide a business update on Thursday, August 26, 2021 at 9:00 am eastern.

Participants should dial Toll-Free: 844-369-8770 or Toll/International: 862-298-0840 at least 10 minutes prior to the conference call and web cast. For those unable to attend the call, a replay will be available on May 26, 2021 after 4 pm eastern at Toll-Free 877-481-4010 or Toll/International 919-882-2331 passcode #42520 until 9 am on Thursday, September 2, 2021.

The webcast will be presented live at https://www.webcaster4.com/Webcast/Page/2167/42520.

About Route1 Inc.
Route1 Inc. 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 Busseri
President and Chief Executive Officer
[phone]
[e-mail]

This news release, required by applicable Canadian laws, 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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

© 2021 Route1 Inc. All rights reserved. No part of this document may be reproduced, transmitted or otherwise used in whole or in part or by any means without prior written consent of Route1 Inc. See https://www.route1.com/terms-of-use/ for notice of Route1's intellectual property.

This news release may contain statements that are not current or historical factual statements that may constitute forward-looking statements or future oriented financial information. These statements are based on certain factors and assumptions, including, expectations regarding the success of the private placement and the terms on which the Company will raise funds, price and liquidity of the common shares, expected financial performance, expected subscribers and subscription-based revenue, business prospects, technological developments, development activities, the ability of the Company to obtain the supersedeas bond in order to appeal the decision to the United States Court of Appeals for the Federal Circuit, and like matters. While Route1 considers these factors and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. These statements involve risks and uncertainties, including but not limited to the risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these and other risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement or future oriented financial information to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, except as required by law. Estimates used in this presentation are from Company sources. Past or forecasted performance is not a guarantee of future performance and readers should not rely on historical results or forward-looking statements or future oriented financial information as an assurance of future results.

SOURCE: Route1 Inc.

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