Route1 Inc V.ROI

The results are out!

[Pandora]

One thing you can always count on with ROI is to never count on anything positive in ROI.

Another round of excuses on why the results remain in a downhill slide. The standard from the news cycles -- supply chain problems and chip source problems! Not unexpected but it is now in print. A conference call on results will not be held until late May.??

We have pretty much gone through the same old, same old, for ten years. It is definitely a problem when flubber can outdo management quarter after quarter in projecting where the company is going.

I will definitely have to look at the sell opportunity of at least a good portion of my remaining shares. At my age I cannot see me living long enough to take advantage of any possible improvement in the direction of the company based on what we have experienced over the past ten years.

I truly thought management could usurp flubber but........!! It just goes on and on and on.

TORONTO, ON / ACCESSWIRE / April 27, 2022 / Route1 Inc. (OTCQB:ROIUF)(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, 2021.

Fiscal Year 2021

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

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

For FY 2021 and 2020, Total Other Expenses are comprised of the following items:

In 000s of CAD dollars	FY 2021		FY 2020
Litigation settlement		-		(163)
Reserve for goods fraudulently taken		-		597
Stock-based compensation		568		497
Interest		277		163
Foreign exchange		31		71
Other		(85)		68
Total Other Expenses		791		1,234

Q4 2021

The Company's operating results for Q4 2021 with comparatives are as follows:

Statement of operations In 000s of CAD dollars			Q4 2021				Q3 2021				Q2 2021				Q1 2021				Q4 2020				Q3 2020
Revenue
Subscription and services			1,977				2,297				2,671				2,758				2,528				2,599
Devices and appliances			5,022				4,960				3,663				3,786				4,637				6,523
Other			36				31				4				67				62				25
Total revenue			7,035				7,288				6,338				6,611				7,227				9,147
Cost of revenue			4,660				4,696				3,443				3,647				4,315				6,134
Gross profit			2,375				2,592				2,895				2,964				2,912				3,013
Operating expenses			2,382				2,437				2,451				2,542				2,469				2,562
Operating profit 1			(7	)			155				444				422				443				451
Patent litigation 2			-				-				-				-				1058				381
Total other expenses 3			-08				216				(17)				284				321				598
Net income (loss)			(315	)			(61	)			461				138				(936	)			(528	)

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.

Adjusted EBITDA in 000s of CAD dollars			Q4 2021				Q3 2021				Q2 2021				Q1 2021				Q4 2020				Q3 2020
Adjusted EBITDA 4			341				465				760				764				768				778
Amortization			348				310				316				342				325				327
Operating profit			(7	)			155				444				422				443				451

4 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 2021				Sep 30 2021				Jun 30 2021				Mar 31 2021				Dec 31 2020				Sep 30 2020
Cash			63				727				166				513				1,137				2,226
Total current assets			5,726				7,543				5,008				5,357				6,408				8,836
Total current liabilities			10,563				11,542				9,095				9,887				9,779				13,385
Net working capital			(4,837	)			(3,999	)			(4,087	)			(4,530	)			(3,371	)			(4,549	)
Net working capital (adjusted for contract liability)			(2,205	)			(228	)			(1,263	)			(853	)			256				490
Total assets			15,097				16,833				13,739				14,386				14,176				15,749
Net bank debt and seller notes			2,926				2,194				1,673				1,215				655				383
Total shareholders' equity			2,728				2,982				2,906				2,443				2,141				37

As of April 27, 2022, there are a total of 2,925,000 options are currently outstanding under the stock option plan.

"The last half of calendar 2021 and into early 2022 has been a difficult period of time for Route1 as the global supply chain and computer component disruptions have had a real negative impact on the Company's operating results", said Tony Busseri, Route1's President and CEO. "The Company has quickly responded to what it believes to be other than short-term market changes by reducing fixed costs, while focusing on areas of our business model where we can better control our growth and success. We expect that the first couple of reporting quarter in 2022 will be additional transitional quarters."

Material Business Events Since September 15, 2021

September 15, 2021: The Company announced that it had acquired Spyrus Solutions Inc. ("Spyrus"). Founded in 2018, Spyrus delivers encryption, authentication and digital content security products to U.S. defense and civilian agencies, international government, financial, and healthcare enterprises. It develops and manufactures cryptographic products including the SPYCOS smart card operating system enabling strong protection for data-in-motion, data-at-rest and data-in-process.

Route1 acquired Spyrus for the assumption of debt obligations of approximately US $0.58 million with $0.22 million paid at closing and the balance paid out over the next 12 months. In addition, Route1 has agreed to pay the prior owners of Spyrus additional compensation based on certain gross profit metrics being met.

November 1, 2021: The Company announced that Alex Shpurov has been hired as Senior Vice President and Chief Technology Officer ("CTO") and started on November 8, 2021. Mr. Shpurov brings more than 25 years of experience in delivering enterprise solutions in multiple domains including blockchain, information security and artificial intelligence with a strong focus on the finance, banking and capital markets verticals.

March 10, 2022: The Company issued a news release providing a business update. The update focused on how the Company plans to (a) reduce its dependency on original equipment manufacturers ("OEM") and the cyclicality of supply chain and manufacturing disruptions, and (b) address the strong enterprise and government trend to move desktop computing to applications accessed in the cloud.

Route1's growth focus will now be tied to its core services and engineering competencies.

The Company will emphasize its turn-key engineering services for clients using video and sensor capture technology to deliver real-time, secure actionable intelligence. We will amplify our customers return on investment by driving outcomes through the application of advanced technological solutions and by leveraging our expertise in video intelligence data. Our continued investment in data security and user authentication technologies including our flagship software application MobiKEY and service delivery platform DEFIMNET, separate us from our turn-key engineering services competitors as we bring a unique skill set as a service to our clients.

As we first shared with the market on November 1, 2021 and updated on March 10, 2022, Route1 continues to see delivery times well beyond traditional norms for equipment that directly or indirectly rely upon semiconductor chips . We took certain actions over the summer of 2021 based on OEM guidance to mitigate the impact of the global chip shortage on our ability to deliver on purchase orders, including building inventory and encouraging our clients to place orders ahead of their traditional timing cycle. These actions were good short term actions but ultimately did not address the root issue that OEM delivery times have materially impacted our business model. The uncertainty of supply and delivery times have made it difficult to forecast operating results from this part of our business.

Route1 currently excels as an engineering and professional services provider for automated license plate recognition ("ALPR") clients and is seeing growth in the number of accounts, increased investment in the technology once deployed by an account, and strong demand for post-sales support from these accounts.

Technology Focus: Route1 currently is or intends to be active with its turn-key engineering and professional services to support clients investing in video and sensor capture technologies including ALPR, surveillance video, body worn cameras and drones. Further, Route1 intends to expand on its capability to support clients adopting access control technology. Genetec will continue to be an important technology partner for Route1.

Turn-key Services: Route1's turn-key engineering and professional services to support our clients are as follows:

• Advisory and analysis including operations assessment
• Design and engineering
• Hardware and software procurement
• Project management
• Installation and configuration
• End user and administrator training
• Technology life-cycle maintenance and support
• Operations optimization

Operations optimization is centered around data integration and intelligence. Areas of expertise are: (a) data transport, hosting and storage; (b) data presentation including cloud based software applications to deliver data captured in an actionable format; (c) data analytics including integration of multiple data sets; and (d) data and network security, and user authentication. Our focus will be scenarios where video intelligence and related environmental data can augment an organization's capabilities - whether in the private or public sector. Building on our expertise in the video space, combined with our deep-rooted background in software development, system infrastructure operations and cybersecurity, Route1 has a significant competitive advantage and is in position to differentiate itself in the engineering and professional services arena.

The subscription-based revenue model for Route1's MobiKEY product was one of the first in the industry. Now, Route1 will augment and solidify that recurring revenue stream by adopting the model throughout our Company. Unlike traditional turn-key engineering and professional-services organizations, the emphasis is on engaging our customers in a way that creates an on-going interaction and drives long term recurring revenue. Our investment will be in people and relationships with independent software vendors ("ISV") and OEMs to leverage their intellectual property to gain actionable intelligence that generates exceptional outcomes for our clients.

Business Update Conference Call and Webcast

The Company has decided to hold a conference call and web cast with the announcement of its Q1 2022 financial results in late May 2022.