TORONTO, Nov. 28 /CNW/ - Route1 Inc.(TM) (TSX-V:ROI), the trusted provider of security and identity management network solutions, today announced its 2007 Third Quarter financial results as at and for the three and nine months ended September 30, 2007.
Business Highlights
-------------------
During and subsequent to the third quarter of fiscal 2007, Route1
announced the following significant developments:
- Route1 reached significant milestones in the third quarter of fiscal
2007, including new product releases, OEM opportunities, and the
refocusing of the sales strategy.
- The Company's participation at Coalition Warrior Interoperability
Demonstration (CWID) exceeded all expectations, and led the way for
future pilots, further testing, and strong interest in its suite of
defense and space products and solutions.
- Jeffrey Denberg joined Route1 as its newly appointed Senior Vice
President of Sales, and has repositioned the company's go-to-market
sales strategy. Under Jeff's guidance, Route1 has positioned its
Channel to address the burgeoning SMB market, while Route1's core
sales team focuses on OEM, Enterprise, Government, and Military
accounts.
- Route1 announced two significant OEM (original equipment
manufacturer) type relationships. The first was with Novatel
Wireless, a leading global provider of 3Gwireless broadband access
solutions. This agreement will see the integration of Route1's
subscription-based services, including TruOFFICE(TM), into the
Novatel Wireless product line of wireless modems. The second was with
Giesecke and Devrient (G&D), the leading global provider of
banknotes, ID documents, and smart card solutions, and will enable
Route1's suite of identity management subscription services, such as
PurLINK, to be integrated into G&D's StarSign(R) product family of
identity tokens.
- Route1 also announced the availability of its high assurance
identity-based access products and services focused on securing web
content. EnterpriseLIVE is Route1's family of high assurance
platforms built for Financial Services, Military, Government,
Telecommunication Service Providers, and Web 2.0 communities to
secure systems and digital content. PurLINK, Route1's PKI-based
authentication service, enables end-users to access and navigate web
content secured by the EnterpriseLIVE platform. PurLINK is positioned
to become the de-facto, trusted standard for secure access to
portals, online systems, and applications.
"These past several months have been productive for Route1 across all of our areas of operation. I am particularly pleased with the progress that we made in establishing our OEM alliances with partners like G&D and Novatel," said Andrew White, Route1's President and CEO. "Along with the changes we are making to our sales structure, I am expecting these developments to begin positively impacting our financial results in 2008."
Revenues for the third quarter of fiscal 2007 were $134,778 compared to $171,313 for the same period last year, representing a $36,535 or 21% decrease. In the quarter, the Company reorganized and restructured its sales efforts and strategy, shifting its primary focus from an indirect channel-driven strategy, utilizing value-added resellers, towards a direct-to-market enterprise/government focused strategy employing a direct sales team. This restructuring culminated in the replacement of the Company's senior vice president of sales along with several members of the indirect sales team, resulting in a disruption of the Company's sales efforts for the quarter. The Company is focused on building its direct sales team in support of its direct-to-market sales strategy.
"Our experience of working directly with large enterprise and government accounts confirms that our suite of products and services is well-suited to a direct distribution model," noted White. "We expect to see a return to revenue growth in the coming months as a result of the restructuring of our sales team."
Gross margin loss for the third quarter of fiscal 2007 was $118,895 compared to $176,906 for the same period last year, representing a $58,011 or 33% improvement. General and administration expenses for the third quarter of fiscal 2007 were $556,873 compared to $619,540 for the same period last year, representing a $62,667 or 10% decrease. Research and development expenditures for the third quarter of fiscal 2007 were $564,098 compared to $483,522 for the same period last year, representing an $80,576 or 17% increase. Selling and marketing expenditures for the third quarter of fiscal 2007 were $500,453 compared to $878,740 for the same period last year, representing a $378,287 or 43% decrease. Net loss for the third quarter of fiscal 2007 was $1,801,447 or $0.01 per share compared to $2,217,083 or $0.01 per share for the same period last year, representing a $415,636 or 19% improvement.
Cash and cash equivalents decreased by $1,644,647 to $775,039 as at September 30, 2007 from $2,419,686 as at June 30, 2007 or decreased by $711,325 to $775,039 from $1,486,364 as at December 31, 2006. The Company has recently completed private placement that resulted in gross proceeds of $7,766,480. Total Assets decreased to $2.9 million from $5.9 million a year earlier. This includes cash and cash equivalents of $0.8 million. As at November 28, 2007, the share capital consisted of 349,388,115 common shares outstanding.
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As at and for the
three months ended
--------------------------------------------------
(in thousands of
dollars, except Change
for per share Sep 30, Sep 30, ----------------------
amounts) 2007 2006 $ %
--------------------------------------------------
--------------------------------------------------
STATEMENT OF
OPERATIONS
Revenues 134,778 171,313 (36,535) (21.3%)
Cost of revenues 253,673 348,219 (94,546) (27.2%)
--------------------------------------------------
Gross margin (loss) (118,895) (176,906) 58,011 32.8%
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Operating Expenses
General administration 556,873 619,540 (62,667) (10.1%)
Research & development 564,098 483,522 80,576 16.7%
Selling and marketing 500,453 878,740 (378,287) (43.0%)
Amortization 75,906 68,296 7,610 11.1%
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1,697,330 2,050,098 (352,768) (17.2%)
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Loss before the
following items (1,816,225) (2,227,004) 410,779 18.4%
Interest income 14,778 9,921 4,857 49.0%
--------------------------------------------------
Loss from continuing
operations (1,801,447) (2,217,083) 415,636 18.7%
Income (loss) from
discontinued
operations - - - -
Net loss and
comprehensive
loss for the period (1,801,447) (2,217,083) 415,636 18.7%
--------------------------------------------------
--------------------------------------------------
Loss per share (0.01) (0.01) - -
CASH FLOW INFORMATION
Operations (including
non-cash working
capital changes) (1,730,006) (2,181,403)
Investing 443 (90,536)
Financing 84,916 4,686,532
------------------------
Net cash flow (1,644,647) 2,414,593
Cash and cash
equivalents
Beginning of period 2,419,686 1,520,129
------------------------
End of period 775,039 3,934,722
------------------------
------------------------
BALANCE SHEET
INFORMATION
Working capital 802,794 3,786,248
Total assets 2,930,808 5,920,397
Shareholders' equity 1,442,842 4,539,439
--------------------------------------------------
As at and for the
nine months ended
--------------------------------------------------
(in thousands of
dollars, except Change
for per share Sep 30, Sep 30, ----------------------
amounts) 2007 2006 $ %
--------------------------------------------------
--------------------------------------------------
STATEMENT OF
OPERATIONS
Revenues 1,030,656 452,129 578,527 128.0%
Cost of revenues 1,117,536 1,154,663 (37,127) (93.2%)
--------------------------------------------------
Gross margin (loss) (86,880) (702,534) 615,654 87.6%
--------------------------------------------------
Operating Expenses
General administration 1,667,073 1,970,680 (303,607) (15.4%)
Research & development 1,721,714 1,688,510 33,204 2.0%
Selling and marketing 1,884,645 1,966,601 (81,956) (4.2%)
Amortization 211,931 236,620 (24,689) (10.4%)
--------------------------------------------------
5,485,363 5,862,411 (377,048) (6.4%)
--------------------------------------------------
Loss before the
following items (5,572,243) (6,564,945) 992,702 15.1%
Interest income 49,258 35,668 13,590 38.1%
--------------------------------------------------
Loss from continuing
operations (5,522,985) (6,529,277) 1,006,292 15.4%
Income (loss) from
discontinued
operations - 457,000 (457,000) -
--------------------------------------------------
Net loss and
comprehensive
loss for the period (5,522,985) (6,072,277) 549,292 9.0%
--------------------------------------------------
--------------------------------------------------
Loss per share (0.02) (0.02) - -
CASH FLOW INFORMATION
Operations (including
non-cash working
capital changes) (5,338,180) (5,818,715)
Investing (260,093) (210,243)
Financing 4,886,948 9,125,318
------------------------
Net cash flow (711,325) 3,096,360
Cash and cash
equivalents
Beginning of period 1,486,364 838,362
------------------------
End of period 775,039 3,934,722
------------------------
------------------------
BALANCE SHEET
INFORMATION
Working capital 802,794 3,786,248
Total assets 2,930,808 5,920,397
Shareholders' equity 1,442,842 4,539,439
About Route1 Inc.
Route1 is the trusted provider of security and identity management network solutions that are redefining today's digital landscape. 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. MobiKEY enables users to connect to their desktop data, applications, network resources, and web content with services such as TruOFFICE and PurLINK. 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 worldwide. 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)2007 All rights reserved. Route1, the Route1 Logo, Mobi, Route1
MobiKEY, Route1 TruOFFICE, Route1 PurLINK, Route1 EnterpriseLIVE, 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.
%SEDAR: 00008444E