TORONTO, Aug. 16 /CNW/ - Route1 Inc.(TM) (TSX-V:ROI), the trusted provider of security and identity management network solutions, today announced its 2007 Second Quarter financial results as at and for the three and six months ended June 30, 2007.
Revenue for three months ended June 30, 2007 was $488,000, an increase of $334,000 or 217%, from $154,000 for the comparable period in the preceding year and an increase of $80,000 or 20% for the previous quarter ended March 31, 2007. Included in revenues this quarter is higher percentage of hardware revenues that reflects the Company's recent unbundling in its pricing strategy of hardware and services. Under this new strategy, resellers are now placing stock orders for the hardware and carrying inventory whereas in the past they would wait until they had an order in hand before purchasing the combined hardware and services. The subscription-based services revenue associated with these hardware revenues will be recognized into revenue over the next few months when these subscriptions become activated.
Gross loss for three months ended June 30, 2007 was $9,000, an improvement of $255,000, from a $264,000 loss for the comparable period in the preceding year. The negative gross margin for the quarter is due primarily to the higher percentage of hardware revenues to subscription-based services revenues as discussed above and combined with volume discounts offered to resellers for placing stock orders in the quarter. The cost of revenue number includes the variable/direct cost of hardware and software licenses, and also the fixed/indirect costs of providing the MobiNET subscription services which includes but is not limited to support personnel, system hardware amortization and facilities which are not directly variable and are not expected to increase significantly in the short term as the number of subscribers increases. The Company anticipates that the gross margin as a percentage of revenue will increase as the Company builds its subscriber base.
The Company's losses for the quarter were $2.0 million ($0.01 per share), which is an improvement of $400,000, from a $2.4 million ($0.01 per share) for comparable period in the preceding year. Operating expenses totalled $2.0 million for the quarter, which is an improvement of $200,000 or 6%, of $2.2 million for the comparable period in the preceding year, that consisted primarily of G&A (31%), Selling and Marketing (32%), R&D (33%) and amortization (4%).
Total Assets increased 49% to $4.8 million from $3.2 million a year earlier. This includes cash and cash equivalents of $2.4 million. As at August 15, 2007, the share capital consisted of 282,492,449 common shares outstanding.
"The progress that we have made this quarter in developing our product and services offerings, and strengthening our distribution channels is in line with our strategic plan for the Company," said Andrew White, President and CEO of Route1. "And with the addition of Jeff Denberg as our new Senior Vice President of Sales, and his experience in dealing with the information technology needs of enterprise customers, will prove invaluable as we continue to position Route1 as the premiere solution to today's mobile workforce. We expect Jeff's expertise and leadership in executing sales strategies to accelerate Route1's penetration of our targeted market segments."
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(in thousands of Canadian As at and for the As at and for the
dollars, except per share amounts) three months ended six months ended
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June 30 June 30 June 30 June 30
2007 2006 2007 2006
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STATEMENT OF OPERATIONS
Revenues 488 154 896 281
Cost of revenues 497 418 864 807
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Gross margin (loss) (9) (264) 32 (526)
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OPERATING EXPENSES
General and administrative 635 745 1,110 1,351
Research and development 679 675 1,158 1,205
Selling and marketing 640 660 1,384 1,088
Amortization 74 82 136 168
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LOSS BEFORE UNDERNOTED (2,037) (2,426) (3,756) (4,338)
Interest income 25 16 34 26
Income (loss) from
discontinued operations - - - 457
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Net loss for the period (2,012) (2,410) (3,722) (3,855)
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Loss per share (0.01) (0.01) (0.01) (0.02)
CASH FLOW INFORMATION
Operations (including non-cash
working capital changes) (2,040) (2,015) (3,068) (3,637)
Financing 700 (53) 4,802 4,439
Investing (75) (138) (260) (120)
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Cash flow (1,415) (2,207) 934 682
Cash and cash equivalents,
beginning of period 3,835 3,727 1,486 838
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Cash and cash equivalents,
end of period 2,420 1,520 2,420 1,520
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BALANCE SHEET INFORMATION
Working capital 2,312 1,222 2,312 1,222
Total assets 4,765 3,201 4,765 3,201
Shareholders' equity 3,077 2,017 3,077 2,017
Given the closeness of the Company's Annual General Meeting on August 29, 2007, it has decided not to hold a conference call in connection with the release of these quarterly financial results.
About Route1 Inc.
Route1 is the trusted provider of security and identity management network solutions that are redefining today's workplace. 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. Combined with TruOFFICE, Route1's secure, remote access service, MobiKEY enables users to connect to their desktop data, applications and network resources. 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 in New York, Florida, the UK, Germany, and Latin America. 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)Route1 Inc. All rights reserved. Route1, the Route1 Logo,
Mobi, Route1 MobiKEY, TruOFFICE, 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.