Dr. Barry West joins the Board of Directors
Toronto, August 28, 2019 – Route1 Inc. (OTCQB: ROIUD and TSXV: ROI) (the “Company” or “Route1”), an advanced North American provider of industrial-grade data intelligence, user authentication and ultra-secure mobile workforce solutions, today announced its second quarter (Q2) financial results for the period ended June 30, 2019.
Route1 generated net cash flow from operating activities of approximately $0.97 million during Q2 2019 compared with cash generated from operating activities of $0.57 million in Q2 2018. Non-cash working capital generated was $1.17 million in Q2 2019 compared to $0.33 million of cash generated in the same period a year earlier. Net cash used by the day-to-day operations for the three months ended June 30, 2019 was $0.21 million compared to cash generated of $0.24 million in Q1 2018.
PCS Mobile Acquisition
On June 28, 2019, Route1 acquired Portable Computer Systems, Inc. (“PCS Mobile”). The Company completed the purchase of PCS Mobile for total consideration of US $2.5 million. Consideration consisted of: (a) US $1,030,000 in cash; (b) US $500,000 by way of 11.2 million common shares of Route1 Inc.; (c) US $250,000 in an unsecured note with principal amortization annually in arrears with amortization of $80,000 in year one and two; and $90,000 in the third year, and an annual interest rate of 3% paid annually in arrears, and (d) US $720,000 in an unsecured note with amortization monthly in arrears with a straight line amount of $20,000, an annual interest rate of 2.37% paid monthly in arrears, with a condition of payment that the continued employment of each of Ms. Pakkebier and Mr. Murphy, who are married.
Additional transaction terms include no assumption of indebtedness, a minimum cash balance of $200,000, a working capital balance that is reflective of the time of year and the nature of business, and a key employee non-compete and non-solicitation for a period equivalent to the term of employment plus two years.
PCS Mobile is a computer reseller with expertise in mobile data applications, including wireless products for in-vehicle use. The company offers guidance and state-of-the-art mobile devices for a wide range of applications including utilities, telecommunications, field services, insurance, healthcare, Fire/EMT, police and public safety – as well as state and local government.
Based in Denver, Colorado, PCS Mobile services customers primarily located in the Southwestern and Rocky Mountain regions of the U.S. Rugged devices and applications include but are not limited to Panasonic Toughbook mobile computers, Xplore and Getac rugged tablets, Genetec license plate recognition solutions, and accessories from Gamber-Johnson and Havis.
Based on prior year’s results and short history as a Route1 company, Route1 expects PCS Mobile to add annualized revenue of approximately US $15 million with a gross margin of 16% to 25%. The EBITDA contribution from PCS Mobile is expected to be consistent with current Route1 results.
Dr. Barry West joins the Board
Earlier today, Dr. Barry West, a career technologist and business leader with over 30 years in the information technology field with an emphasis on cybersecurity and cloud computing, joined the Board of Directors of Route1.
Barry is currently the Founder and CEO of West Wing Advisory Services, LLC. Dr. West retired in May 2018 as the Senior Advisor and Senior Accountable Official for Risk Management at the U.S. Department of Homeland Security (“DHS”). This included spearheading the Cybersecurity Executive Order. In all, Barry has 28 years of US Government service including being the Chief Information Officer at six different US Government agencies or organizations: Federal Deposit Insurance Corporation, the Pension Benefit Guaranty Corporation, the Department of Commerce, Federal Emergency Management Agency during Hurricane Katrina, and the National Weather Service. He also was briefly the Acting Deputy CIO at DHS prior to his retirement.
Dr. West has represented the US Government information technology community at four different world-wide gatherings of NATO countries. Barry has held prior positions in the private sector including President of MicroTech, President of Mason Harriman Group and Executive Vice President of SE Solutions.
Barry is the past President of two of the largest IT associations in the United States: the American Council for Technology and the Association for Federal Information Resources Management (“AFFIRM”) where he was presented the AFFIRM President’s Award in Public Sector for 2017-2018.
Dr. West completed his Executive Doctorate degree in Business from Georgia State University with a focus on Cloud Computing in 2014. Dr. West was appointed in 2017 by Georgia State University to be their Executive-In-Residence. He has published in IEEE Computer Society, IT Professional journal and the European Journal of Information Systems (EJIS) journal article where his research focusing on cloud computing was selected for publication. Dr. West received an Honorary Doctorate degree in Business from his alma mater Northern Michigan University in May 2015 where he also delivered the Commencement Speech for the Spring 2015 graduates.
Barry is also an Emeritus member of the Government Business Executive Forum and the current Co-Chair for the Consumer Electronics Show (“CES”) Government 2020.
AirWatch Litigation Update
On August 28, 2019, Route1 filed a motion related to the August 7, 2019 order that granted AirWatch’s motion for summary judgment of non-infringement of Route1’s U.S. Patent No. 7,814,216 (the “Order”). In the Order, Route1’s infringement claims were dismissed and AirWatch’s counterclaims for a declaration of invalidity of Route1’s U.S. Patent No. 7,814,216 (the ‘216 Patent”) were left intact for trial commencing December 2, 2019. In its August 23, 2019 motion, Route1 is asking the Court for the following relief: (1) to permit Route1 to immediately appeal the summary judgment ruling to the U.S. Court of Appeals for the Federal Circuit; and (2) to either (a) dismiss AirWatch’s counterclaim for invalidity of the ‘216 Patent without prejudice to AirWatch’s right to re-assert that claim should Route1 prevail on its appeal, or (b) postpone the trial on AirWatch’s counterclaim until after Route1’s appeal of the summary judgment order is concluded.
Stock Option Grant
Route1 today granted employee stock options in the aggregate amount of 400,000 with an exercise price of $0.50 per share price. The stock options expire on August 27, 2024 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 3,506,060 options. As of today’s date, including the above grant, a total of 3,462,500 options are currently outstanding under the stock option plan.
Investor Conference Call and Webcast
Route1 will hold a conference call and web cast to discuss the Company’s financial results and provide a business update on Tuesday, September 3, 2019 at 4 p.m. eastern. Participants should dial Toll-Free: 1-800-289-0438 or Toll/International: 1-323-794-2423 at least 10 minutes prior to the conference, pass code 6063095. For those unable to attend the call, a replay will be available on Tuesday September 3, 2019 after 7 p.m. at Toll-Free 1-844-512-2921 or Toll/International 1-412-317-6671, pass code 6063095 until 11:59 pm on Tuesday September 17, 2019.
The webcast will be presented live at http://public.viavid.com/index.php?id=135980
Route1, operating under the trade names GroupMobile and PCS Mobile, is an advanced North American provider of industrial-grade data intelligence, user authentication, and ultra-secure mobile workforce solutions. The Company helps all manner of organizations, from government and military to the private sector, to make intelligent use of devices and data for immediate process improvements while maintaining the highest level of cyber security. 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: www.route1.com.
For More Information, Contact:
Chief Executive Officer, Route1 Inc.
+1 416 814-2635
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.
© 2019 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/ for notice of Route1’s intellectual property.
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, approval by the TSX Venture Exchange of the share consolidation the impact of the share consolidation on the trading volume, price and liquidity of the common shares, expected financial performance, business prospects, technological developments, and development activities and like matters. While Route1 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 presentation are from Company sources.
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