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Route1 Provides Q4 2016 Operations Update

Appoints John Marino as Board Director

Toronto, February 9, 2017 - Route1 Inc. (OTCQB: ROIUF and TSXV: ROI) (the Company or Route1), a world-leader in secure data protection technologies and user authentication for government and enterprise, today provided an update on market drivers, its operations and business development activity.

Trump Administration

On January 20, 2017, Donald J. Trump was sworn in as the President of the United States. As has been widely reported, the new President's administration is likely to approach public administration matters very differently than the previous administration.  

On the matter of cybersecurity, an early glimpse into the Trump administration's approach was provided through a publicly circulated draft Executive Order, commentary on the draft Executive Order at a morning briefing by the White House on January 31, 2017, and public comments made by President Trump and the Congressional Cybersecurity Caucus. 

Of note, President Trump has stated that he plans to do the following:

  • Direct heads of federal agencies, not just the chief information officer (CIO), to take responsibility for internal cybersecurity and for modernizing their organization’s technology; holding cabinet secretaries and agency heads totally accountable for the cybersecurity of their organizations. 
  • Empower agencies to modernize their IT systems for better security and other uses, spanning federal networks and data.

"One of the things I was really upset about with the OPM breach is the director or the agency clearly didn’t understand the value of the data they were charged with protecting."- Rep. Jim Langevin, D-R.I., and head of the House Cybersecurity Caucus.

 The Office of Personnel Management (OPM) breach which was first reported in June 2015 is in reference to the data breach targeting the records of approximately 21.5 million people. The massive intrusion exposed personally identifiable information such as social security numbers as well as names, dates and places of birth, and addresses.

Route1's sales opportunities lie in the potential impact of a final Executive Order that holds agency leadership accountable for data protection.  We would expect to see:

  • The full implementation of HSPD-12 across all civilian departments, thus ensuring PIV cards are used for user authentication while accessing data remotely.
  • Reassessment of the risk vectors associated with the deployment of VPN-based technologies for accessing data while a user is mobile.
  • Investment in technologies that take away the "human" risk factor - human's cannot be trained to be perfect in the use of any technology.
  • Demand from technology vendors that improved cybersecurity will also generate true cost savings.
  • Delivering functionality and convenience at the expense of cybersecurity to no longer be an acceptable practice.
  • Requirement for full and complete audit trails of how and when government data was accessed and/or used.
  • Reassessment of vulnerabilities related to certain currently approved approaches used to deliver derived credentials.

 Appointment of John Marino

Route1 has appointed John Marino as a board director to assist the Company in working with the Trump administration, and the leadership of agencies in where Route1 has a strong interest in that agency's continued use and/or expansion of MobiKEY technology and the adoption of DerivID. 

John Marino is the principal of Marino Consulting, a Washington, DC strategic consulting firm with a client portfolio of domestic and international companies spanning across diverse industries. He brings more than 15 years of progressive experience in public relations, business development, and international affairs. This includes serving in leadership roles at public affairs firms and non-governmental organizations in the nation’s capital.

Marino Consulting has represented technology, cyber security, transportation, and manufacturing companies, nonprofits & NGOs, trade associations, and higher education institutions. The firm delivers government relations, communications, market access, issue management, and brand enhancement capabilities that navigate the private and public sectors and position its clients for favorable outcomes.

Earlier in his career, Mr. Marino served as the national executive director of the National Italian American Foundation (NIAF), the foremost organization advancing US-Italy relations in the areas of politics, business, education and culture. He worked closely with the bipartisan Italian American Congressional Delegation and other governmental leaders and directed the organization’s thought leadership programs.

Mr. Marino received a Bachelor of Arts from Clemson University in South Carolina, a Master of Arts from Fordham University in New York City, and pursued professional training at Georgetown University’s Government Affairs Institute in Washington, DC. 

Mr. Marino has been granted 1,000,000 stock options at an exercise price of $0.05 per share. The stock options expire on February 8, 2022 and will vest thirty percent on the first anniversary, thirty percent on the second anniversary and the remainder on the third anniversary.  Under the Company’s stock option plan, 10% of the issued capital is reserved for issuance or a total of 34,766,091 options.  As of today’s date, including the above grant, a total of 32,689,000 options are currently outstanding under the stock option plan.

Change has Risks

As a significant portion of Route1's revenues are generated from US government departments and agencies, there are also risks for Route1 that come with a new president and administration.  Further, a majority of Route1's MobiKEY renewals with the US government fall within the first 100 days of the Trump administration. 

  • Immediately after an election, US government agencies sometimes defer material changes in their operations and purchases of products and services until a new cabinet is appointed and the political direction is confirmed.  A deferral and possible change in political direction following the election could have an adverse effect on our renewals, prospects and results of operations.
  • President Trump has publicly supported certain policies including those related to changes to international trade agreements and policies favoring US persons and companies. Therefore, there is uncertainty as to which policies will be implemented by the US government in 2017 and beyond, and when such measures and policies would be implemented.
  • Certain CIOs of US government agencies are required to resign following the election of a new President. There is no assurance that a resigning CIO will be reappointed or that a newly appointed CIO will be supportive (or continue to be supportive) of Route1's products and services.
  • As a consequence of the timing of the transition to a new administration, the renewal of Route1's products and services could be delayed or cancelled.

 Conversely, this same political landscape, marked by turnover of agency CIOs and senior staff, also presents opportunities for companies offering value based solutions. The Republican controlled Congress will demand fiscal restraint and push the agencies to identify cost savings solutions without compromising security. In addition, the Trump Administration seems to be committed to expanding cybersecurity effectiveness across the agencies and has called for a comprehensive review. President Trump is also seeking to run the government in a corporate manner where performance, efficiency and cost are measured. So while we foresee some uncertainty, this same environment may create new opportunities for Route1 in the public sector.

MobiKEY Paid, Active Subscribers

Revenue from services includes MobiKEY application software, MobiNET (DEFIMNET) platform and other appliance licensing or yearly maintenance.  All 2016 numbers are preliminary figures, unaudited and subject to final adjustment.

2017q1-001

Business Development Highlights

  • US Department of Defense (DoD): In February 2017, in accordance with the DoD Risk Management Framework (RMF), an Authority to Operate (ATO) was issued by the DoD's Joint Service Provider for Route1's MobiKEY technology.
  • US Marine Corps (USMC): The USMC started testing the MobiKEY technology in November 2015.  In January 2017, in accordance with the DoD RMF, an Authority to Operate (ATO) and Authority to Connect (ATC) was issued by the USMC, authorizing Route1's MobiKEY technology for the Marine Corps enterprise network.
    In addition, Route1 has been working with the USMC to setup the MobiKEY technology on an enterprise-wide contract vehicle that will allow all components of the USMC to procure the MobiKEY technology.  Route1 now anticipates the contracting process to be completed by late February or early March 2017.  Upon MobiKEY being available for procurement by USMC, Route1 expects sales in the first ninety days of 100- 250 users and additional further growth on a monthly basis similar to the Company's experience with the US Department of the Navy.  There is no assurance that any of the sales assumptions mentioned above will transpire in either the expected amounts or within the expected timeframe.
  • US Department of the Interior (US Fish and Wildlife Service):  In December 2016, US Fish and Wildlife Service renewed and expanded its use of the MobiKEY technology from 550 to 1,000 users.

Share Repurchase Program

On September 27, 2016, the Company announced with approval from the TSX Venture Exchange its intention to make a Normal Course Issuer Bid (NCIB). The NCIB permits the Company to purchase for cancellation up to 5% of the common shares in the public float. The maximum number of shares allowed for repurchase is 17,563,870. Purchases under the NCIB commenced September 27, 2016 and will end September 26, 2017, or the date upon which the maximum number of common shares have been purchased by the Company.  As of February 7, 2017 the Company had purchased a total of 2,884,000 common shares under the NCIB.

Since the first NCIB was announced on February 28, 2012, Route1 has repurchased a total of 40,727,200 of its common shares, representing 10.5% of Route1's common shares outstanding as at February 28, 2012.

As at February 7, 2017, Route1 has 348,193,414 common shares outstanding.

Q2 2016 Financial Results Notification

Route1 will report its four quarter and full year financial results for the period ending December 31, 2016 during the month of April 2017.  A notification will be sent out in advance of Route1 reporting its results.  Further, Route1 intends to hold a conference call and webcast the day following the release of its results.

About Route1 Inc.
Route1 Inc. is a world-leader in secure data protection technologies and user authentication for government and enterprise.  Route1 solutions enable the workforce to be more productive and more flexible without compromising system access, data-at-rest, or data-in-use.  The Company’s suite of patented enterprise security solutions combines best-in-class authentication, data security and secure communications with streamlined administration tools, running on a proven, trusted infrastructure.  From mobile access to business continuity to best-in-class full system encryption, Route1 offers the most effective, affordable methods to secure the digital fortress, while meeting or exceeding the highest standards for government and industry.  Route1 has Full Authority to Operate from the U.S. Department of Defense, the U.S. Department of the Navy, the U.S. Department of Homeland Security, the U.S. Department of the Interior, and other government agencies.  The Company is also trusted by enterprise security teams in the banking, healthcare, legal and education sectors, among others. With offices in Washington, D.C., Boca Raton, FL and Toronto, Canada, Route1 serves public and private sector clients around the world.  Route1 is listed on the OTCQB in the United States under the symbol ROIUF and in Canada on the TSX Venture Exchange under the symbol ROI.

For more information, visit our website at: www.route1.com.

For More Information Contact:
Peter Chodos
+1 416 814-2619
This email address is being protected from spambots. You need JavaScript enabled to view it.

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.

This news release contains statements that are not current or historical factual statements that may constitute forward-looking statements. These statements are based on certain factors and assumptions, including, expected financial performance, business prospects, technological developments, and development activities and like matters. While Route1 Inc. 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 risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement 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 news release are from Company sources.

© 2017 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.html for notice of Route1’s intellectual property. 

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