Mr. Tony Busseri reports

ROUTE1 ANNOUNCES Q3 2023 FINANCIAL RESULTS

Route1 Inc. today released its financial results for the three- and nine-month periods ended Sept. 30, 2023.

As of Nov. 15, 2023, there are a total of 2,075,000 options currently outstanding under the stock option plan.

Business and operations metrics

Further to the company's prior news releases, shareholder calls and webcast presentations, Route1 has communicated operating metrics that it believes assist in establishing whether the company's business model is generating shareholder value. The company is adapting to an increasingly difficult competitive environment and is achieving success in the automatic licence plate recognition technology component of its business. It is the company's goal to demonstrate success through cash flow generation that provides for impactful debt reduction and improved returns on invested capital, and additionally justifies scaling the business model.

Further, in today's update, the company has added a third metric, quarterly fixed costs.

A. Gross profit (GP) generated from non-MobiKEY and other Route1 software application sales on a quarterly basis needs to achieve and maintain a minimum value of $1.15-million (U.S.) (Benchmark A). Gross profit is defined as revenue less devices and appliances direct costs but does not include other direct costs including salaries, wages and consulting fees, bad debts, and travel expenses.

B. Recurring ALPR support contracts need to grow to in excess of $1.0-million (U.S.) in annualized revenue (Benchmark B).

Route1 started the 2022 fiscal year at a base of $595,000 (U.S.) per annum.

C. Fixed costs including amortization need to not exceed $1.65 million per quarter (Benchmark C).

Operating results commentary

• Route1's third quarter operating performance moved in the right direction even with the continued reduction in MobiKEY software application revenue, a reflection of the growth and improvement in the balance of the company's revenue generating activities including:
  • ALPR new client and current client expansion of technology usage projects;
  • ALPR client life-cycle maintenance and support contract servicing and expansion;
  • Rugged device value added reseller sales;
  • Sales derived from the company's PocketVault P-3X data security and user authentication technology.
• Route1 is building a larger "book" of recurring revenue generated by technology life-cycle maintenance and support contracts/end users as shown in Benchmark B.
• The MobiKEY application software and Route1's next generation cloud-based secure remote access and user authentication offering, MobiKEY X, will see a further revenue reduction in Q4 2023 as a result of the loss of the U.S. Department of the Navy account.
• As outlined in the company's Q2 2023 update, the MobiKEY technology's successful path forward with U.S. Department of Defense clientele is significantly challenged by stiff competition from cloud-based enterprise offering providers, specifically Microsoft 365.
• Route1's Q4 2023 should see business activity and associated gross profit related to its new business model, as described in Benchmark A, in excess of $1.0-million (U.S.).

"The sales model pivot is creating operational stability and growth in business activity. There is meaningful further work to do to improve our working capital position, reduce third party debt levels and generate improved operating cash flow but, the announced third quarter was a step forward," said Tony Busseri.

Business update conference call and webcast

Route1 will not hold a shareholder conference call and web cast to discuss its third quarter 2023 results. Shareholder queries can be directed to the company's president and chief executive officer, Tony Busseri, by using the contact information provided in the original version of this news release.

About Route1 Inc.

Route1 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.

We seek Safe Harbor.