Tony Busseri - CEO Brian Brunetti - President

Spencer Churchill - Paradigm Capital Unidentified Analyst - Private Investor

Thank you. Good afternoon everyone.

Thank you for attending the call today. I am joined by our President, Brian Brunetti and our Chief Financial Officer, Tom Lieu.

Hopefully you have had the opportunity to review our press release issued earlier today. Route1's financial statements and MD&A have now been filed onto SEDAR and also available on our website.

As you know at the start of these calls there is some pro forma matters that I need to address so bear with me as I read from a script for a couple of slides. As described on the company's slide that's in front of you, I would like to inform listeners that this presentation 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 the 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 the reporting documents filed by Route1 on SEDAR. 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.

Route1 undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date in which such statement is made or they reflect occurrence of unanticipated events except as required by law. Estimates used in this presentation are from Route1's sources.

I need to point out that on today's call we use names that are either registered trademarks or trademarks of Route1 in the United States or Canada. I am now done with the pro forma part of our presentation.

Let's move forward and talk about the 2014 financial performance of our corporation. If you have looked at our financial statements you will see that 2014 for us was a productive year.

Candidly our best operating performance since I took over as CEO some five years ago. The impossible item here is that we continue to have a growing revenue line item as well as growing cash flow, EBITDA, and earnings.

What underpins that growth is related to the revenue line item and specifically the recurring revenue. As you can see from the chart in front of you, if you add up total revenue it hasn’t been materially increasing over the last couple years but the component of it that is related to SaaS based or recurring revenue has dramatically grown.

We look forward to 2015 continuing this strength for a number of reasons that we will discuss in today's presentation. But this is a healthy reason why, our cash flow, EBITDA, and net income have continued to increase.

Let’s talk a little bit more about the service or stock component of our revenue stream. We have continue to see steady growth in each of the last three quarters related to the total number of active page users as well the average revenue per user.

We expect continued growth but from add-on users at the Pentagon and other like DOD accounts, and we expect this growth principally there will be a similar ARPU or slightly less as accounts grow into much larger numbers. Growth should accelerate as a result of the determent now being in place at the Pentagon for a couple of years and some of those pilots turning into paid customers and we’ll talk about that later today.

We also will expect to see growth this year from accounts like the Navy, Department of Interior, the Canadian government and others that went all through in greater detail as Brian takes over the stage. Let’s talk about our cash flow a little bit.

One of the things I do want to point out is that during 2014 our normal course issuer bid was active, we bought about 10 million shares in 2014 spending as you can see around $350,000. We expect that to continue through the course of 2015.

They may not be the best known stock price, I think it’s always important to highlight the seasonal nature of our cash or bank account balances. Our business is seasonal and that between March 31 and May 31 we renew and are paid for about $4 million U.S.

of services revenue which in itself means that as of June 30th that will be the high point of the fourth quarters during the fiscal year related to our cash balance. It doesn’t mean the business gets worse through the balance of the year, it does mean that’s the point of time where we have the maximum amount of cash.

Moving along to the balance sheet, I am not sure there is one specific metric I’d point out about the 2014 year except to say the all metrics improved across the Board. We continue to have no debt on the books, a growing cash balance, healthy non-cash working capital, and we are investing it in technology as required.

We expect the balance sheet to continue to grow and improve as we move through to 2015. Now what should you expect from us in 2015.

While I don’t think we can understate to start with the impact of a weakening Canadian dollar. As we disclosed in our North Star financial statements and talked about over the course of the years a large majority upwards of 95% of revenue is generated by U.S.

account. And what the Canadian dollar having moved from let’s call it $0.91 towards the end of last year into the low 80s at the end of 2014 and continuing to slide in the 2015 of their belts.

We will see an uptick in revenue and recurring revenue, EBITDA and net income and cash flow always a result of this and that cannot be understated. The second thing you should expect from us is that we will continue to have growth in MobiKEY users but more importantly I think I can comfortably say impactful MobiKEY growth.

Well some of you in the Q&A session may say it is impactful in order of 5, 10 or 25 users. For us to start with is getting material growth above 15,000 users and if you ask me during the Q&A session I hope I will give you the same answer.

You’ll also note that as we have described in the press release a couple of months ago that with investment and deferment for the U.S. Department of Interior particularly U.S.

Fish & Wildlife services. We expect this department and specific component to become a much larger overall use of our technology which will drive our user growth as well as some of our other accounts within the military infrastructure.

We are going to also talk a bit so they be a key theme to our 2015 year about product development growth and what that means to us throughout the year. Let’s hope that finally come back to us when we specifically talk about technology and development related to it.

I think before we ask Brian to go into our business development pipeline and some of our major initiatives, I think it’s important to reset again where we are in the marketplace on our positioning. If you have reviewed our AGM presentation back that we delivered towards the end of November, some of this information will look fairly similar and that’s because over the last 5 months our positioning has not changed.

We continue to attack the niche vertical called secure enterprise mobility. It’s important to know what we don’t address.

We don’t address credit cards fraud or firewall breaches. We are very specific to addressing the problem when you have an employee or contractor who wants to access their work place when the remote can be anywhere around the world.

And the work space for us is not to find us an email account, it is very much a full desktop. We are also playing out where our clients care about security.

Unfortunately there still continues to be too many enterprising government accounts that don’t value security at the level that they should. Talking a little bit about the market we have defined where we position ourselves, we define the problems in it, the market response is obviously very important to us because it deals with the size and the growth of the market we are in.

It also addresses the maturity of it or as I would like to often say we are winning a 9 inning baseball game we are in. I am going to address Canada by way of example and showing you where we are by highlighting something that came up a couple of weeks ago.

If you follow me on twitter or you follow our twitter account, you know we are all over a report that the Canadian Audited General's office. Michael Ferguson had a major breach where they lost a number of encrypted USB drives.

The fact that they are using our former technology for mobility is disappointing for a lack of better descriptive. And also describes even though this auditor general rolled a steaming report in the last year and a half about the federal government and the use of technology and their approach to cyber security, his office is using an antiquated approach and have the major breach.

So as much as we say hey, I read about this breach, I read about this article, why aren't popping being Route1. Please keep in mind what's to talk, what is criticism awaits, enterprises are doing -- we are still in the early days of changes in behavior.

I know you are getting tired of hearing that statement from me, we are not a big enough company to go on a soapbox, [indiscernible], change within the broader industry. But we are seeing improvement and we need to continue to be responsible to where the market is.

So let's go ahead. Couple other little things, or I am being repetitive on the slides to what I just said on the prior slide, we are for the security conscious consumer, consumer being an enterprise on large organization where they are trying to deliver the full desktop to their employees when they are mobile.

Our goal to increase revenue above and beyond asking for a mature market and people being more responsible to security it is the expanded number of use cases for the mobile worker. That goes hand in hand with the technology and the evolution and expansion of it that we are going to talk about later today So why are guided breaches important.

Why is these pieces starting to change, why do we start to have it, why are we having more excitement around the opportunity. Well, fundamentally we can go through a list of breaches that happened during 2014 say any one of those should have triggered a mass change in behavior.

Here is the punch line for me. Until Board of Directors or leadership recognized data intake answer related to security as a business of strategic issue, not an IT issue.

It is going to continue to be -- we are going to continue to have slow adoption, of progressive technologies that delivered the functionality for our user in 2015 and delivered the underlying security that the enterprise requires for our mobile user in 2015. We know from the consequences that were outlined to us from the -- for example the breach at Target and the impact on the CEO and CTO and CIO and CFO that there are real economic consequences.

I think we will see more and more of this as we go forward. We are working with more law firms on trying to understand the economic consequences of breaches and work with them and their clients around delivering a solution that limits exposure for mobility going forward.

So I am optimistic there will be a rotation of this issue from it being an IT issue to being a business issue or strategic issue shortly. I want to highlight couple more things about the market and if you have heard it from me before I apologize but I cannot pound the desk enough on this subject.

As sexy and neat as it is to talk about cyber security, North Korean, Chinese, and other rotations [ph], let's keep in mind the large majority of the other breaches are related to human error and specifically human error from our employees or contractors. These are preventable issues and each time I read about this, a large laptop, USB device, or hard drive it just gives me the creeps.

These are very, very addressable issues and I will come back to it if we can use technology that is far safer than relying on a perfect human being, why aren’t we. So the punch line here again is that enterprise mobility has proven to be a major risk to information security practices across all sectors.

This is not a government issue, this is not an Intel community issue, this is a business communications issue and whether again a two person operator with the trucking company or in the U.S. department of defense at the pentagon, this same technology is available for any type of user and provides the same security level.

So specifically we have now set the table on the market. We have set a table on what we are trying to accomplish.

Let’s talk about where we are going to go and specifically we are going get done from a business development and product development perspective. The high level punch line is and it won’t surprise you noting that I talked earlier about the renewal period, that we are working to complete the renewals of our two largest accounts.

What we cannot point is the pentagon or the enterprise information technology support Director of the U.S. Department of Defense.

That's now been completed, that’s the 4000 users and the purchase order has been issued. We have one of the two homeland securities customs and border protection renewals in place and we expect other one in the next month.

So things are moving along there but as often is said, until it’s done its not done. So that's where we stand with our renewals.

Historically we have not put all the press release when we renewed our key accounts. But if there is a material deviation, something I hear as the surprise we will obviously communicate it in a public forum.

The second part of our business development plan deals with the build on -- we want to build-on expanding U.S. government account opportunities.

Brian’s going to go on to detail off this. The third point is to develop new accounts, new opportunities, within freak government on both sides of the border and then four and this is where I am going to hammer on after Brian talks about business development initiatives leveraging our core competencies to bring new offerings to the market.

Sounds simple, sounds easy, sounds sexy, the reality is the world that we live in today is becoming much more complex and difficult to support. New operating systems, new variants of operating systems means worth spending more and more resources just having an up to date MobiKEY.

Let’s talk about that in a second. I’ll invite Brian to jump in here and now take the floor upon business development.

Thank you Tony and we’ll start with the U.S. Navy which is a continued focus for our organization.

As you know we have a accredited infrastructure built up in the Navy’s hosting facility and this account has been around for a long time but we are really just starting to see some good traction over the last calendar year. We had an increase of somewhere in the order of magnitude of about 650 subscribers over the last year and that organic growth was actually slowed towards the end of this year due to some end gen contractual issues with the prior contractor.

We are close to resolving those issues, we believe that that will be resolved this month and we are pretty excited about Navy as an account and the opportunities that we see there for growth. The second account which Tony has talked about which is the properly referred to as EITSE [ph] but we more broadly call it the Pentagon.

This is again another DOD organization where we have our accredited infrastructure stood up in their hosting facility and our focus is to continue to organically grow this account both with Washington Headquarter Services and Office of Secretary of Defense. Those are the two main components that EITSE is responsible for.

They have 26 sub components underneath those organizations. But what’s really exciting about this infrastructure is it allows us to make it available to any DOD organization.

So we have several pilots underway utilizing this infrastructure as a way for them pilot and that’s offered at no charge. So our approach here is to try and get as many DOD organizations to test the technology, see if it fits their used cases, and then we have a willing partner in EITSE as a place where they can become subscribers of the technology.

Tony did mention also the Department of Interior and more specifically the component of Fish & Wildlife Service. We have just finished building this infrastructure in our Florida Quality of Excellence Center.

And that infrastructure will ship in the next couple of weeks and we’ll be installing that over the next month. And our approach here is initially to expand the user base with the Fish & Wildlife Service Group.

We have quite an active awareness campaign, going on right now with some marketing initiatives, there is MobiKEY posters that were jointly developed between ourselves and the Fish & Wildlife Service Group. We have MobiKEY videos playing in the elevators of headquarters to raise awareness and we are doing a series of information sessions or watch and learn.

Once we have that success at Fish & Wildlife, we will look to broaden the user base through the broader Department of Interiors. So look to places like National Park Services, Office of Surface Mining, Indian bureau -- Bureau of Indian affairs and the other components of Department of Interior.

There is also interest with this customer to do something similar to what I just talked about at the Pentagon where they are interested in making this infrastructure available for not just the Department of Interior component but as well other components in the federal government. So, that is a pretty exciting initiative for us.

We can just skip to the next couple of slides. Now let us switch gears and talk a little bit about Canada and the Canadian government.

This has been an area where we have invested a lot of resources into trying to grow this market. It is not as mature as the U.S.

market so it is a more difficult sale. And through the restructuring that has taken place over the past couple of years with shared services, some of the buying power from certain organizations has been diminished.

Now that being said we do have two pretty exciting accounts that we are working on. They are both paid pilots, the first is Natural Resource of Canada.

They support user base of about 4000 people and they have a paid pilot ongoing right now that is in very early stages but we are starting to get some positive feedback. The second Canadian Government Group that is also doing a paid pilot is Canada Border Services Agency, sister agency to our U.S.

based customer, customs and border protection. And that pilot is also doing well and we are actually making a few adjustments on a customer specific basis to our technology to integrate with some of the systems that they have in place.

So, again fairly early stage but it is an opportunity that we see for growth. Switching gears a little bit and talking about a specific vertical, let's talk a little bit about the financial sector.

What we have noticed over the past couple of years is we have customer examples in a variety of different verticals not just government. We have engineering firms, law firms, housing firms, hospitals, and we have some small to mid-size banks as customers.

And as we talked to our customers and start to build better relationships with them, we start to understand some of their challenges and their status and why MobiKEY is a very, very good fit for what they are trying to do. And as a result of that we have decided to invest some specific resources in the financial steps we are targeting U.S.

Bay small to mid-size U.S. bank and credit union leveraging the positive reference account that we have as existing customers and make a consorted effort to try and grow this vertical and we are starting to see some success through those efforts, we will also see attending a banking industry quite a large show as a partner with FIS Global, InfoShare in Florida towards the end of April, and we are excited about this initiative because it helps us diversify our customer base beyond the heavy weight focus towards government.

Defining some of the things Brian is working on from a business development perspective, we have a roadmap for MobiKEY to support him and his client's needs. What we are releasing in the next couple of weeks, MobiKEY 4.5 on April 20th is probably our most comprehensive robust release since I have been the CEO of the company.

There is a series of improvements that would be characterized as bug fixes or security enhancements but then there is a bunch of functionality that in often cases has been driven by and in most cases by clients asking for it. Whether it be supporting audio for OSH user, whether it be secure storage, whether it be secure remote scanning, whether it be scaling features in the display.

There is just a lot that goes into this release that we have been working on for a number quarters now and it won't get out there and I think that's a new baseline for us with our solution. It also provides enhancements and improvements with how our fusion devices, work with smartcards such as Cap Cards and Pip Cards for a DOD and civilian U.S.

government clients. We’ll then be following shortly on that.

We have our first release for android, it is a couple of months behind and that’s principally because the amount of extra resources we’ve thrown into MobiKEY 45 but android is in the testing phase right now and we are confident with that release date and then hopefully by June 30th we’ll be out with an improved MobiKEY for IOS that provides an impossible improvement to the user experience and addresses bugs and then you can see for the balance of the year what else we have on the roadmap. What’s interesting about this is to talk about new offerings because I talked about it at the AGM and I talked about it in our communication.

Our need or want to be able to come out with new solutions, new offerings this year absolutely will do that, plan to do that. What’s interesting about it is when we step back and reflected on the point with Windows Metro now coming out with the demand for Linux, Android for Samsung, we have a number of operating systems we now support for the mobile asset.

So that one can have a productive MobiKEY session and just to make it clear then as a stakeholder, we invest a large majority of our [indiscernible] capital resources within keeping MobiKEY current for lack of a simple term. So new offering support has become a bigger and bigger component to our development life as well as add on to features and improved user experience then you obviously have to stay up to date if not on the cutting edge of security measures and then just general bug fixes.

The one thing we’ve decided as the Board of Director is that as we continue to generate greater cash flow and we think this year will be even more productive than 2014, we plan to reinvest in ourselves and create innovation pocket. And what that does, it will allows to use our core competencies towards additional offerings.

So that’s where we stand from a development standpoint I think. I think it’s important to understand how much money we are putting into supporting additional operating systems, new functionality, be it the MobiKEY today is very different than the MobiKEY we started with 5 years ago when I was a board member with this company and not the CEO.

If we move forward in this presentation, we wrap this up. Let me summarize with the following if I may.

We are poised to reap the benefits of incremental users. We have often used this point as the sales picture institutional investors why we have the right type of investment model.

The reality is that whether it would be 200 or a thousand new users in a quarter or a period, that new revenue drops to the bottom line. Software as a service, as a revenue model is going to be very productive for us going forward, and using the NBA term we have a highly scalable business model.

From a macro environment perspective, we see that things are moving towards the area where we want them to be. We need to see action around the talk but we think we have the right technology for the right type of used cases and that there will continue to be real organic growth with our business model for a number of years to come.

We believe that market opportunity to be quite large also. We also think our technology a superior usability and functionality and security over some of the other traditional approaches.

And we like to talk about VPN because it just doesn’t stand up to the way we deliver and VPN is one of those antiquated technologies that often is being ticked around and used by government like the Canadian one. I won’t go through the rest of the selling features that are related to the MobiKEY except to say that we think we -- you can see from the financial results of 2014 we’ve broken through.

We are in that period where incremental users are going to drop substantially to the bottom line. We are heavily investing in that technology and looking at ways to leveraging our core competencies and the new offerings.

We see a market place that’s starting to open up not just simply government but within certain enterprise verticals like financial services and healthcare and we are quite excited therefore about what 2015, 2016, 2017 will look like for our corporation. So that ends the formal part of today’s presentation.

Brian, Tom and I are now happy to take any of your questions. Operator?

Hey, thanks, good afternoon guys. Just maybe a question on operating expenses.

I mean you guys have been pretty tight for many quarters now, I noticed it kicked up in Q4 over Q3 but not materially. I am just wondering do you think that you will let the purse strings out a little bit as you target some of these new markets like in Canada and the U.S.

banks.

Good question, the answer is going to be no. There may be a reality where we take small amounts of new revenues of size and reinvest them in the development side but Spencer I wouldn’t expect that by way of example that G&A is going to jump on us.

We are pretty comfortable, we always kind of have more people on just about anything you do in life but we are pretty comfortable with the team we have and what I call success fee based contractors that work with us on a business development perspective. We have reinvested on the development and we have a couple new developers they are now working with us so overall I don’t expect that cost structure to materially change as we go forward.

Q4 is always a little bit anomaly because we have our AGM cost in it and that’s just a bit of a reality of the world we live in when we recognize those costs but I -- maybe 3% to 5% year-over-year might be the level of our growth there Spencer.

Yes, wondering about security for the 4C cell phone same stores credit facility and credit card, can you please comment on those?

Okay well. So that’s not our business model.

Our business model is delivering remote access functionality in a secure way. That being said, from our broader innovation lab we are looking at solutions that might touch on some of the 4Cs you spoke to.

But right now that’s not is our sweet spot of what we are selling into.

Okay.

Brian, do you want to add to that.

No, I think that’s right. Ultimately what we are delivering with MobiKEY is a secure, full desktop, remote access data session that enables users to connect back to their work or government seat on any network anywhere in the world or a virtual key.

But ultimately with MobiKEY we are delivering a full desktop experience. But that to Tony’s point, when we look at our patented MobiNET infrastructure, that infrastructure, yes it’s powering the MobiKEY technology but it has the potential to deliver other services and that’s where what Tony mentioned is, we are looking at other technologies where we can play in the secure mobility space.

Sorry, guys I had a few questions I got cut off at the end. I was just on the 720 MobiKEY fusion devices that were going to go a component of the U.S.

DOD weren’t shipped in Q3 hoping to get it done. Obviously you didn’t have in Q4 but maybe early Q1, did those go in the quarter, this quarter?

No, that’s related to the next gen contract issue with the Department of the Navy.

Okay, so that’s going to be a Q2 thing now?

It will be a Q2 thing.

Tony, I believe the device is shipped.

Sorry they get a little…

Yes, the subscribers related to that is tied up in this contractual issue is that correct.

Okay, I got it. And then -- so looking at -- if you add those 720 just doing the math you get comfortably over 15000 subscribers and you talked about sort of trying to be materially above 15,000.

So I am just wondering maybe if you could give, if you could stretch out a little bit more and then give us -- I know you don’t want to give guidance but you are going to get there with shipped with guys that have already been -- with units that have already been shipped. So I am just wondering maybe you can give a little bit more color on what your regular goals are for this year?

Somewhere between 15,000 and 20,000.

Fair enough, and then just last question, I know we have talked a lot about the focus being on government because that is where the value proposition was most compelling for your guys or you have the relationships and where you think you can get traction and bang for your buck. And I guess it is the first time we have talked about a market outside the government.

Obviously you are talking about the small medium size banks and credit unions in the U.S. so I am just wondering what has changed in your thinking or what's changed in the market for you to believe that, that type of opportunity is now accessible?

Well, it is an interesting question. Spencer it is principally driven by the number of inbound calls without marketing to that vertical that has triggered it.

And the due diligence or the discussion with some of these smaller bags and credit unions that led us to believe that this could be a productive vertical. We are doing a webinar in the next couple of months for this vertical through a trade publication.

We are doing the large industry conference Brian spoke to you about. We have surprisingly a lot of interest from the smaller credit unions and banks and so, like it has always made sense that a bank with the security should be very interested on what we have to offer.

I am a little surprised that the smaller shops that are more aggressive around using our technology. Brian, do you want to add to that.

No, I think that is right. We -- as I mentioned, we do have example customers in a variety of different verticals and we went through an assessment and really found that the banking sector in many ways has shared some of those principals when it comes to information and security of their data.

And so it was -- it is a natural vertical for us. We have tried in the broader banking sector in Canada in the past without success but in the U.S.

it is just a much more distributed market and there is a lot more players. And we think that there is a real opportunity for traction.

Okay, great. Thanks guys.

Excellent, since there are no further questions, I would like to thank you for joining us for today's conference call. We will look forward to issuing our Q1 results over the next six weeks or thereabout.

For any of you who may have joined the call in progress a replay will be available after 7.15 Eastern this evening at 1-877-870-5176 or 1-858-384-5517, pass code 9980838 until midnight on April 15th. We look forward to speaking with you again shortly.

We are pretty excited about the year we have in front of us. I know we have been in today's call but real down there it is somewhat limited as a result of what we can and cannot say.

I do think 2015 is going to be that much more exciting than 2014. Thanks a lot, enjoy the spring, we will talk soon.