Route1 Provides Q2 2016 Operations Update

TORONTO, ONTARIO--(Marketwired - Aug. 3, 2016) - Route1 Inc. (TSX VENTURE: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.

MobiKEY Paid, Active Subscribers

Services Revenue In 000s of CAD dollars	Jun 30 2016	Mar 31 2016	Dec 31 2015	Sep 30 2015	Jun 30 2015
Closing number of subscribers	16,800	16,490	16,286	15,989	15,410
Revenue per subscriber	$383	$367	$361	$362	$353
Subscriber Revenue	$1,591	$1,496	$1,467	$1,424	$1,346
Other Services Revenue	$169	$152	$149	$148	$223
Total Services Revenue	$1,760	$1,648	$1,616	$1,572	$1,569

Revenue from services includes MobiKEY application software, MobiNET (DEFIMNET) platform and other appliance licensing or yearly maintenance.

Brian Brunetti, President of Route1 Inc., commented on today's news, "The subscriber base for our innovative secure access technology and resulting revenue continued to increase in the second quarter of 2016, and our business development opportunities advanced across the board during the same timeframe. Cybersecurity initiatives within the U.S. government continue to create substantial deployment opportunities for our suite of patented technology solutions, as evidenced by recent MobiKEY purchase orders from the Department of Defense and the Navy Bureau of Medicine and Surgery. We have a number of upcoming technology releases on the horizon as we look to meet the evolving demands for data security from our government and enterprise customers, including the imminent launch of our MobiENCRYPT product. This is an exciting time for Route1 as we continue to grow and strengthen our balance sheet, as well as diversify our product offerings. I look forward to updating our shareholder base on material developments as they occur."

Business Development Highlights

Route1 continued to be engaged with client's from civilian, intelligence and defense components within the U.S. government who had strong interest in the MobiKEY technology.

• U.S. Department of Defense - Since November 2015, Route1 has been working with a branch of the United States Armed Forces - a new client for Route1 - to set up the MobiKEY technology on an enterprise-wide contract vehicle that will allow all components of the new client to procure the MobiKEY technology. Route1 anticipates the contracting process to be complete in late Q3 2016 or early Q4 2016. Upon MobiKEY being available for procurement by the new client, Route1 expects sales in the first ninety days of 100 - 250 users and additional further growth on a monthly basis similar to our experience with the U.S. Department of the Navy.
• U.S. Department of the Interior (U.S. Fish and Wildlife Service) - Earlier this year the U.S. Department of the Interior (DOI) completed its Assessment and Authorization (A&A) process and issued an authority to operate (ATO) for the MobiKEY technology and the DEFIMNET platform that the U.S. Fish and Wildlife Service (FWS) installed at a secure DOI Data Center in March 2015. Since the receipt of the ATO, Route1 has completed the hardening and deployment of updates to the DEFIMNET infrastructure to make it production ready for DOI personnel, transitioned the MobiKEY Fusion devices to the latest generation MobiKEY Fusion3 devices that were procured by FWS in Q4 2015, and advanced procurement discussions with a number of bureaus within DOI. In parallel, FWS has deployed and integrated with the DEFIMNET VDI capabilities to support the rollout of VDI enabled desktops to FWS' MobiKEY users. Route1 expects to see an increase in DOI users during 2H 2016.
• After the close of Q2 2016, Route1 received a purchase order from a component of the DOD for 2,000 MobiKEY Fusion3 devices. The devices will replace certain of the client's MobiKEY Fusion and MobiKEY Fusion2 devices. The use of a MobiKEY Fusion3 devices with MobiKEY 5.1 or higher application software supports:
  • Multiple smart card readers: In environments requiring the use of a second smart card to elevate access or execution privileges (typically referred to as an ALT Token), remote users can utilize a secondary MobiKEY Fusion3 device in conjunction with their ALT Token to support this functionality.
  • Linux: Remote assets running Linux Mint, Fedora, Ubuntu and CentOS operating systems.
  • Bootable MobiKEY: Feature for remote assets that permit booting from an external USB device. Bootable MobiKEY is a security feature built into the MobiKEY Fusion3 and MC3 devices that provide the user the option to boot from the MobiKEY device, thus bypassing the remote asset's existing operating system.
• Lastly, after the close of Q2 2016, Route1 received a purchase order from a component of the U.S. Navy, the Navy Bureau of Medicine and Surgery (BUMED) for 100 MobiKEY Fusion3 devices and 100 MobiKEY application software subscribers with contractual options to expand the BUMED user base to 300 subscribers. BUMED is the headquarters command for Navy Medicine, and develops policy and direction toward the patient and family care vision carried out by the U.S. Navy, U.S. Marine Corps and U.S. civilian personnel throughout the world.

Product Development Highlights

• MobiENCRYPT

On August 9, 2016, Route1 will release MobiENCRYPT, a new Route1 technology offering that enables a secure mobile workforce by leveraging identity card-based credentials to protect government organizations from data-at-rest loss and security breaches. Part of Route1's suite of patented security solutions, MobiENCRYPT integrates with government-issued CAC and PIV identity card technology, offering true multi-factor authentication for fast and seamless pre-boot authentication and on-the-fly encryption, allowing government employees and contractors to access their workspaces quickly, without compromising on security. It is more affordable and secure than other hardware or software-only solutions. MobiENCRYPT enables a mobile and flexible workforce while protecting government-furnished equipment (GFE) from loss or theft. Once encrypted, GFE remains encrypted after local and remote logins by authorized personnel, while other solutions are limited to local access only.

• Authentication as a Service

In September 2016, Route1 will release its first standalone user authentication offering. The offering will enhance authentication via mobile devices with the levels of security necessary for U.S. government. Route1's release of this offering is in response to a user shift towards greater mobility and BYOD, and the fact that physical smart cards are an inconvenience for the user when using a mobile device.

It is Route1's belief that the vendors first to the market in this space have failed to adequately assess and address risks to government information systems, data and ultimately national security.

• MobiKEY

On July 8, 2016, Route1 released MobiKEY for Android 5.0 and MobiKEY A2T for Android 5.0. MobiKEY A2T for Android 5.0 was tested on Samsung Galaxy S4, Note 3, Note Pro 12.2 and Note 10.1 running Android 4.4.

MobiKEY A2T for Android delivers full workspace access from any device, anywhere, at any time, without compromising data security. Mobile workers have the freedom to securely access their digital workspace using the most integrated secure access and multi-factor authentication approach on the market. MobiKEY is cost-effective and more secure than traditional VPN-based solutions, and offers turnkey set-up and integration into any IT infrastructure. It's ideal for mobile or BYOD workers and business continuity (COOP) situations. A MobiKEY Fusion A2T device is required to run this application. Features of the technology are as follows:

• Offers users exactly the same access remotely that they have at their office
• Integrates with government-issued CAC or PIV cards as part of the authentication process
• Your data stays within your network's perimeter
• Compliment to an enterprise's virtual desktop infrastructure investment and a path to desktop consolidation
• Cross domain technology, host assets (the one you want to access) can be on any domain or network
• Enterprise registration and deployment tools
• Integration with Active Directory
• Fully integrates with virtual desktop infrastructure
• Connection history details for auditing and reporting purposes
• Bandwidth efficient - 20 kbps average bandwidth usage per connected user

Route1 also has several enhancement and functionality development projects ongoing to keep MobiKEY as the most cost-effective way to enable authorized access for your mobile and local workforce while maintaining the highest security standards. Planned MobiKEY application software releases for during the remainder of the calendar year are as follows:

• MobiKEY for Android 5.1 and MobiKEY A2T for Android 5.1: Support for Android 5.x and 6.x, and support for Android 4.4 and 5.x with Knox 2.x respectively.
• MobiKEY 5.2: New desktop management protocol, support of audio in both directions

Please note that development project plans and related release timing can and often are influenced by new clients requirements.

Share Repurchase Program

On September 22, 2015, 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 18,262,570. Purchases under the NCIB commenced September 27, 2015 and will end September 26, 2016, or the date upon which the maximum number of common shares have been purchased by the Company. As of August 1, 2016 the Company had purchased a total of 12,144,000 common shares under the NCIB.

Since the first NCIB was announced on February 28, 2012, Route1 has repurchased a total of 35,813,200 of its common shares, representing 9.2% of Route1's common shares outstanding as at February 28, 2012.

As at August 1, 2016, Route1 has 353,107,414 common shares outstanding.

Q2 2016 Financial Results Notification

Route1 will report its second quarter financial results for the period ended June 30, 2016 before the markets open on Thursday, August 11, 2016.

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 TSX Venture Exchange under the ticker symbol TSXV: ROI.

For more information, visit: www.route1.com.

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.

© 2016 Route1 Inc. All rights reserved. Route1 Inc. is the owner of, or licensed user of, all copyright in this document, including all photographs, product descriptions, designs and images. 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. Route1, Route 1, the Route1 and shield design Logo, MobiDESK, Mobi, Route1 MobiVDI, Route1 MobiDESK, Route1 MobiBOOK, Route1 MobiKEY, Route1 MobiNET, IBAD, MobiVDI, MobiNET, DEFIMNET, Powered by MobiNET, Route1 Mobi, Route1 MobiLINK, TruOFFICE, MobiLINK, EnterpriseLIVE, PurLINK, TruCOMMAND, MobiMICRO and MobiKEY 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.

The DEFIMNET and MobiNET platforms, the MobiKEY, MobiKEY Classic, MobiKEY Classic 2, MobiKEY Classic 3, MobiKEY Fusion, MobiKEY Fusion2, and MobiKEY Fusion3 devices, and MobiLINK are protected by U.S. Patents 7,814,216, 7,739,726, 9,059,962, 9,059,997 and 9,319,385, Canadian Patent 2,578,053, and other patents pending. The MobiKEY Classic 2 and MobiKEY Classic 3 devices are also protected by U.S. Patents 6,748,541 and 6,763,399, and European Patent 1001329 of Aladdin Knowledge Systems Ltd. and used under license. Other patents are registered or pending in various countries around the world.

Other product and company names mentioned herein may be trademarks of their respective companies.