MicroCap Tech Earnings April 09: Route1 (ROI.V) Shows Glimmers of Qwest in Q4 - More to Come

Route1 has been on the brink of breakout for about 5 years now. Every year investors are disappointed. Progress was made in Q4, but the real story started on January 9th, 2009

• Revenue for Q4 2008 was reported at $0.3 million, up 30% for previous Q4 2007
• Gross Margins for the quarter were reported at 50% versus a negative gross margin during Q4 2007
• Company is showing onesy-twoesy progress in sales for Q4 with a leaner operating structure
• After burning through $4.2 million, the company retained $2.1 million in cash on the balance sheet entering FY2009
• On January 9, the Company announced a 30,000 unit commitment from the US federal government through its US government channel - Qwest Communications (Q)

As the Obama administration attempts to streamline government agencies, while maintaining its objective to reduce energy consumption and greenhouse gas emmissions, the Mobikey solution may be at the intersection of these opportunities. Considering that the 30,000 unit order is for one division within one department, prospects look very good at Route1. However, nothing is assured beyond the 30,000 units already guaranteed and anything may happen as the US government budgets are negotiated. Investors should see revenues associated with network setup during Q1 and Q2, which could be in the $2 million range, plus some early mobikey deliveries. The potential major lift in sales should start occuring in H2, 2009. The balance sheet for ROI is a concern for investors, although favourable payment schedules from Qwest may mitigate some of the risk until the devices start to flow. By the end of 2009, there may be several opportunistic network security vendors circling ROI as it gains momentum.