Route1 Provides Reseller Agreement Update
TORONTO, ONTARIO – January 11, 2010 - Route1 Inc. ("Route1" or the "Company") (TSX VENTURE: ROI), a security and identity-based services company, today provided an update on the status of the Company’s exclusive supplier arrangement with a U.S. based provider of telecommunication and data communication products, services, systems, and solutions for the U.S. Federal Government (the “Reseller”).
Pursuant to news releases issued by the Company on January 7, 2009, and April 29, 2009, Route1 announced that it had entered into a three-year agreement with the Reseller (the “Agreement”). Select business terms and conditions are outlined below:
- The Reseller was provided with the exclusive right to resell Route1 security and identity management solutions to the U.S. Federal Government in 2009.
- The Reseller committed to purchase a minimum of 30,000 Route1 MobiKEY™ devices along with TruOFFICE™ subscription-based services in 2009 (the “Minimum Amount”).
- The Reseller agreed to provide advertising and marketing support to promote Route1’s solutions to various U.S. Federal Government departments and agencies.
- The Reseller agreed to provide network-hosting services to Route1 from their facilities.
As at September 30, 2009, the Reseller had taken delivery of approximately 5,000 MobiKEY™ devices along with TruOFFICE™ subscription-based services. The Reseller recently informed Route1 that it would not be respecting its contractual obligations under the Agreement in regards to their purchase of the remaining Minimum Amount. The Reseller also informed the Company that it wishes to continue to market and sell Route1 security and identity management solutions to the U.S. Federal Government in 2010, but on a non-exclusive basis.
Route1 has communicated to the Reseller that it will continue to fulfill its obligations under the Agreement and work with the Reseller to continue to service the U.S. Federal Government through the end of the Agreement’s term. The Company also informed the Reseller that in no way should the Company’s actions be construed as a waiver of any of its rights under the Agreement based on the Reseller’s action to not purchase the remaining Minimum Amount.
United States Government Go To Market Strategy
Route1 has elected to act as set out above based on its plan at the current time to focus on closing on sales opportunities with the U.S. Federal Government. The Company has also started to build new sales partnerships.
Route1 has recently been introduced by a global business and technology services organization to U.S. Federal Government departments and agencies that wish to acquire security and identity management solutions. Management is confident that working with multiple partners to address the Company’s U.S. Federal Government go to market strategy, will expand the number of departments and agency customers it sells to and the volume of units sold.
United States Government’s Department of Homeland Security
In April 2009, a division of the United States Government’s Department of Homeland Security (“DHS”) acquired a DEFIMNET™, the military version of Route1’s service delivery platform for identity and entitlement management, which Route1 installed at one of the DHS data centres. The Company is actively working with DHS to conclude certification and accreditation of DEFIMNET™ to obtain full authority to operate and roll out the solution across the division.
Senior Bank Debt
On October 19, 2009 the Company announced that it had closed a CAD$2.5 million senior bank debt financing (the “Financing”) with one of the world’s largest banking and financial services organizations. The Financing, which is scheduled to be repaid by February 28, 2010, was put in place to fund the purchase of additional inventory to fulfill the Minimum Amount.
Route1 has drawn down approximately CAD$850,000 of the Financing for the purpose of purchasing 12,000 MobiKEY devices. The Company has received the 12,000 MobiKEY devices. The Company expects it will not be drawing down further on the Financing.
Operational Update
As at December 31, 2009 Route1 had more than 16,000 active TruOFFICE subscribers. The Company’s expectations for the 2010 fiscal year, as set out in its’ third quarter 2009 results conference call, remain unchanged.
Forward Looking Statement
Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Route1's current expectations, estimates, forecasts and projections about the operating environment, legal environment, economies and markets in which Route1 operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different from those contemplated in forward-looking statements. Unless otherwise required by applicable securities laws, Route1 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About Route1
Route1 delivers award-winning security and identity management solutions to customers worldwide. These solutions provide universal, secure access to all digital resources and sensitive data. At the heart of Route1's solutions is MobiNET, a communications and service delivery platform focused on identity management and entitlement-based access to resources. Route1's patent-pending solutions are based on FIPS-140-2 cryptographic modules, and simplify the process of meeting increasingly stringent regulatory requirements around privacy and security. Headquartered in Toronto, Route1 is listed on the TSX Venture Exchange (symbol: ROI). For more information, visit www.route1.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Spinnaker Capital Markets Inc.
Ali Mahdavi
Investor Relations
+1 416-962-3300 ext. 225
am@spinnakercmi.com
This news release is required by applicable Canadian laws and 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.
©2010 All rights reserved. Route1, the Route1 Logo, Mobi, Route1 MobiKEY, TruOFFICE, PurLINK, EnterpriseLIVE, DEFIMNET, IBAD and Route1 MobiNET 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.
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.