Route1 Announces Q4 and Fiscal Year 2022 Financial Results

TORONTO, ON / ACCESSWIRE / April 27, 2023 / 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 twelve-month periods ended December 31, 2022.

Fiscal Year 2022 (FY 2022)

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

In 000s of CAD dollars		FY 2022				FY 2021				FY 2020				FY 2019				FY 2018
Revenue
Services			6,194				9,702				9,574				7,834				6,209
Device			15,830				17,432				20,038				16,169				19,972
Other			21				137				94				7				49
Total Revenue			22,045				27,271				29,707				24,010				26,231
Cost of revenue			14,462				16,446				18,635				14,978				18,732
Gross profit			7,583				10,825				11,072				9,032				7,499
Operating expenses			7,645				9,812				9,935				8,214				6,892
Operating profit 1			(62	)			1,013				1,137				818				607
Patent litigation 2			-				-				1,610				1,289				841
Total other expenses 3, 4			1,656				791				1,234				82				200
Net income (loss)			(1,718	)			222				(1,707	)			(554	)			(434	)

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.

⁴ For FY 2022, the Company wrote down its deferred tax asset and liabilities with a net impact of ($1,141).

Fourth Quarter 2022 (Q4 2022)

"Route1's fourth quarter of 2022 net income was negatively impacted by our decision to remove deferred taxes assets and liabilities from the Company's balance sheet in the net amount of approximately CAD $1.1 million. It had no cash consequence. Further, the accounting decision has no impact on our ability to use our $11.8 million in Canadian operating tax losses that are being carried forward to reduce or eliminate cash tax obligations annually on our taxable operating income", said Tony Busseri, Route1's President and CEO.

The Company's operating results for Q4 2022 with comparatives are as follows:

Statement of operations In 000s of CAD dollars			Q4 2022				Q3 2022				Q2 2022				Q1 2022				Q4 2021
Revenue
Subscription and services			1,103				1,326				1,854				1,911				1,977
Devices and appliances			2,279				5,519				5,251				2,781				5,022
Other			6				2				9				3				36
Total revenue			3,388				6,847				7,114				4,695				7,035
Cost of revenue			2,032				4,842				5,015				2,572				4,660
Gross profit			1,356				2,005				2,099				2,123				2,375
Operating expenses			1,859				1,802				1,972				2,012				2,383
Operating profit 1			(503	)			203				127				111				(8	)
Total other expenses 2, 3			1,223				139				183				112				307
Net income (loss)			(1,726	)			64				(56	)			(1	)			(315	)

¹ Before stock-based compensation

² 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.

³ For Q4 2022, the Company wrote down its deferred tax asset and liabilities with a net impact of ($1,141).

Subscription and services revenue in 000s of CAD dollars			Q4 2022				Q3 2022				Q2 2022				Q1 2022				Q4 2021
Application software			475				804				1,402				1,483				1,504
Technology as a service (TaaS)			-				-				-				-				50
Other services			628				522				452				428				423
Total			1,103				1,326				1,854				1,911				1,977

Other services revenue in 000s of CAD dollars			Q4 2022				Q3 2022				Q2 2022				Q1 2022				Q4 2021
Technology life-cycle maintenance and support			300				275				214				209				175
Professional services			328				246				238				219				248
Total			628				521				452				428				423

Adjusted EBITDA in 000s of CAD dollars			Q4 2022				Q3 2022				Q2 2022				Q1 2022				Q4 2021
Adjusted EBITDA 3			(142	)			543				459				446				341
Amortization			361				340				332				335				348
Operating profit			(503	)			203				127				111				(8	)

³ 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		Dec 31 2022				Sep 30 2022				Jun 30 2022				Mar 31 2022				Dec 31 2021
Cash			79				103				299				481				63
Total current assets			4,901				5,445				4,593				3,618				5,726
Total current liabilities			8,825				9,629				9,012				8,147				10,563
Net working capital			(3,924	)			(4,184	)			(4,419	)			(4,529	)			(4,837	)
Total assets			12,355				14,826				13,909				12,574				15,097
Net bank debt and seller notes			3,042				3,018				2,515				2,297				2,926
Total shareholders' equity			1,765				3,209				2,883				2,774				2,728

As of April 26, 2023, there are a total of 2,925,000 options currently outstanding under the stock option plan.

Business and Operations Metrics

Further to the Company's most recent shareholder call and webcast presentation held on February 28, 2023, Route1 communicated operating metrics that it believes assists in the establishment of whether its business model direction change is being successful and can be scaled. Specifically, the growth of gross profit generated from non-MobiKEY sales on a quarterly basis needs to achieve a minimum of US $1.15 million ("Benchmark A"), and recurring ALPR support contracts need to grow to in excess of US $1.0 million in annualized revenue value ("Benchmark B").

Benchmark A

in US 000s			Q4-22 A				Q3-22 A				Q2-22 A				Q1-22 A
Annualized Value		$	802			$	1,080			$	705			$	672

Benchmark B

Route1 continued to see improved levels of recurring revenue derived from its LPR clients through improved support contracts - technology life-cycle maintenance and support revenue. Route1 started the year at a base of US $595,000 per annum.

in US 000s			Q4-22 A				Q3-22 A				Q2-22 A				Q1-22 A
Reported Quarter Value		$	222			$	213			$	168			$	165
Annualized Value		$	888			$	852			$	672			$	660

Since the closing of the Spyrus Solutions acquisition, Route1 has monetized the inventory acquired and realized good short-term success in selling the PocketVault P-3X technology. The Company spent approximately US $580,000 to acquire Spyrus Solutions.

in US 000s			Q4-22 A				Q3-22 A				Q2-22 A				Q1-22 A				Q4-21 A
Spyrus Solutions Gross Profit		$	128			$	280			$	109			$	281			$	410

Business Update Conference Call and Webcast

The Company has decided to hold a conference call and web cast with the announcement of its Q1 2023 financial results in late May 2023.

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 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
+1 480 500-7030
tony.busseri@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.

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.

© 2023 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 expected growth in the value of support contracts for the LPR business, price and liquidity of the common shares, competition for skilled personnel, expected financial performance and subscription-based revenue, business prospects, technological developments, development activities 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 market demand for the Company's products and services and 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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