Route1 Reports Full Year 2012 Financial Results

TORONTO, ONTARIO--(Marketwired - April 11, 2013) - Route1 Inc. (TSX VENTURE:ROI), a digital security and identity management company whose customers include the U.S. Department of Defense, the Department of Homeland Security, the Department of Energy and the Government of Canada, today announced its financial results for the year ended December 31, 2012.

Operating results for the 2012 year were positively affected by the proceeds of an arbitration award which was received in January 2012.

For the year ended December 31, 2012, total revenue increased to $9.1 million from $5.5 million in 2011. Gross profit also increased during the year to $7.5 million or 82% of revenue, versus gross profit of $4.5 million or 82% of revenue during the previous year. The improvement in gross profit is attributable to the arbitration award, a decrease in royalties paid on licenses, and increasing sales of higher margin services revenue. Route1's 2012 total comprehensive net income increased to $2.2 million from a loss of $1.9 million in 2011.

The arbitration award impacted the Company's operating results in fiscal years 2012 and 2011 as follows:

In 000s of CAD dollars	FY 2012 with Award		FY 2012 without		FY 2011 With Award		FY 2011 without
Revenue	9,050		5,614		5,456		5,456
Cost of revenue	1,562		1,031		995		995
Gross profit	7,488		4,583		4,461		4,461
Operating expenses	4,751		4,751		5,852		4,370
Operating profit (loss) for the year	2,737		(168	)	(1,391	)	91
Total other expenses	(580	)	(580	)	(520	)	(1,104	)
Income (loss) from operations	2,157		(748	)	(1,911	)	(1,013	)

Earnings before interest, tax, depreciation, and amortization (EBITDA) during the year amounted to $2.9 million compared to an EBITDA loss of $1.2 million in 2011.

in 000s of CAD dollars	Dec 31 2012	Sept 30 2012	June 30 2012	Mar 31 2012	Dec 31 2011
Revenue	2,277	1,933	1,888	2,952	1,401
EBITDA	645	514	634	1,125	(1,464	)
Amortization	46	54	44	36	40
Operating profit (loss) for the year	599	460	590	1,089	(1,504	)

During the 2012 year Route1 generated cash flow from operations of $1.6 million. As at December 31, 2012, the Company had no bank debt and a cash balance of $754,509.

in 000s of CAD dollars	Dec 31 2012	Dec 31 2011
Cash	755	87
Total current assets	1,928	5,723
Total current liabilities	1,739	7,430
Net working capital	189	(1,707	)
Total assets	2,503	5,999
Bank debt	0	0
Total liabilities	1,886	7,539

Paid, Active Subscribers

As at December 31, 2012, Route1 had 15,913 paying, active subscribers.

In 000s of CAD dollars for Revenue from subscribers	Dec 31 2012		Sep 30 2012		Jun 30 2012		Mar 31 2012		Dec 31 2011
Closing number of subscribers		15,913		14,615		14,876		15,794		15,903
Average Number of subscribers		14,870		14,779		14,911		15,837		15,845
Revenue per subscriber	$	259	$	258	$	253	$	248	$	243
Revenue from subscribers	$	964	$	954	$	942	$	983	$	963

During the fourth quarter of 2012 Route1's revenue per subscriber was $259, an increase of $16 per subscriber or 6.6%, from the same period in 2011.

Investor Conference Call and Webcast

Route1 will hold a conference call today at 9:00 a.m. Eastern Standard Time (EST) to discuss its reported 2012 financial results, and provide an update on business and product development.

Participants should dial 1-888-430-8705 or 1-719-457-2628 at least ten (10) minutes prior to the conference time. The webcast will be presented live at http://public.viavid.com/index.php?id=104176. For those unable to attend the call, a replay will be available after 12:00 p.m. EST at 1-877-870-5176 or 1-858-384-5517 pass code 3811499 until midnight, April 25, 2013.

ABOUT ROUTE1, INC.

Route1 delivers industry-leading security and identity management technologies to corporations and government agencies who require universal, secure access to digital resources and sensitive data. These customers depend on The Power of MobiNET - Route1's universal identity management and service delivery platform. MobiNET provides identity assurance and individualized access to applications, data and networks. Headquartered in Toronto, Canada, Route1 is listed on the TSX Venture Exchange.

For more information, visit our website at: www.route1.com.

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.

© Route1 Inc., 2013. All rights reserved. Route1, the Route1 and shield design Logo, SECURING THE DIGITAL WORLD, Mobi, MobiSecure, MobiLINK, Route1 MobiKEY, Route1 MobiVDI, MobiKEY, MobiKEY IBAD, DEFIMNET, MobiNET, Route1 MobiNET, TruOFFICE, TruFLASH, TruOFFICE VDI, MobiKEY Fusion, MobiNET Aggregation Gateway, MobiNET Switching Array, MobiNET Secure Gateway, EnterpriseLIVE, EnterpriseLIVE Virtualization Orchestrator, MobiNET Agent, MobiKEY Classic and MobiKEY Classic 2, 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. The DEFIMNET and MobiNET platforms, the MobiKEY, MobiKEY Classic, MobiKEY Classic 2 and MobiKEY Fusion devices, and MobiLINK are protected by U.S. Patents 7,814,216 and 7,739,726, Canadian Patent 2,578,053, and other patents pending.

Other product and company names mentioned herein may be trademarks of their respective companies.