Mr. Tony Busseri reports

ROUTE1 ANNOUNCES Q4 AND FISCAL YEAR 2023 FINANCIAL RESULTS

Route1 Inc. has released its financial results for the three- and 12-month periods ended Dec. 31, 2023.

As of April 24, 2024, there are a total of 2,075,000 options currently outstanding under the stock option plan.

Business and operations metrics

Route1 has established three operating metrics that are critical to the company's business model, initially creating cash flow stability and then generating sustainable shareholder value. 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 demands scaling the business model through acquisition.

A. Gross profit 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.). Gross profit is defined as revenue less device and appliance 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.

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

As of April 24, 2024, Route1 is in excess of $1.0-million (U.S.) in annualized revenue.

C. Fixed costs including amortization need to not exceed $1.65-million per quarter.

Operating results commentary:

• Route1's third quarter operating performance again 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, saw a further revenue reduction in fourth quarter 2023 as a result of the loss of the U.S. Department of the Navy account. As outlined in the company's second quarter and third quarter 2023 update, the MobiKEY technology's successful path forward with U.S. Department of Defence clientele is significantly challenged by stiff competition from cloud-based enterprise offering providers, specifically Microsoft 365.
• Route1's first quarter and second quarter 2024 should both see business activity and associated gross profit related to its new business model, as described in Benchmark A, in excess of $1.05-million (U.S.).

"We are pleased to achieve another solid quarter through our sales model pivot, which created positive operating cash flow and growth in business activity. There continues to be work to do to improve our working capital position, reduce third party debt levels and generate improved operating cash flow, but the announced fourth quarter was another step forward," said Tony Busseri, president and chief executive officer.

Business update conference call and webcast

The company will hold a conference call and webcast to provide a business update on Thursday, April 25, 2024, at 4:30 p.m. Eastern Time.

Participants should dial toll-free 888-506-0062 or toll/international 973-528-0011 at least 10 minutes prior to the conference call and webcast. The participant access code is 232702. For those unable to attend the call, a replay will be available at toll-free 877-481-4010, passcode 45656, until 4:30 p.m. on April 25, 2025.

The webcast will be presented live.

About Route1 Inc.

Route1 is an advanced North American technology company that empowers its 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. Route1 is listed in Canada on the TSX Venture Exchange under the symbol ROI.

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