Route1 Completes DHS Deal…. Stock Soars… Sort Of….

You might recall that I had talked about a deal that Canadian software company Route1 had landed to provide its remote access services to the Department Of Homeland Security. A press release today indicates that they have completed the installation of their DEFIMNET (DEFense Identity Management NETwork) system:

The DEFIMNET platform also supports the newly introduced Telework Improvements Act of 2009 by enabling United States Government federal employees to securely perform their duties and responsibilities from home or from other work sites removed from their regular place of employment. DEFIMNET enables federal agencies to comply with the Act’s teleworking technology guidelines and incorporates telework into their continuity of operations planning (COOP) strategy, such that mission critical personnel are equipped to telework in time of a catastrophe. DEFIMNET controls access to and protects agency information and information systems, limits the introduction of vulnerabilities and safeguards wireless and other telecommunications capabilities that are used for teleworking.

Given the Swine flu outbreak, this likey couldn’t have been completed at a better time for both parties. This has caused the stock to shoot up from it’s opening value of $0.04 CDN today. Okay, it’s a penny stock on the TSX Venture Exchange that’s currently at $0.055 cents as I type this. But given this little tidbit, it may not be a penny stock for long:

In addition, the Company announced in January 2009 that it had entered into an exclusivity agreement with Qwest, granting Qwest the exclusive rights to resell Route1’s solutions to the U.S. Federal Government for 2009, which would include sales to DHS. In exchange for Route1 granting this exclusivity, Qwest has committed to purchase and accept for delivery in 2009 a minimum of 30,000 Route1 MobiKEY(TM) devices along with 30,000 TruOFFICE one (1) year subscription-based services, which is valued at approximately US$8.0 million. The future reoccurring revenue stream to Route1 from these 30,000 TruOFFICE one (1) year subscription-based services is estimated at US$5.5 million per year.

“With this binding purchase commitment from Qwest in 2009 plus our current subscriber base, we will have surpassed our break-even point on an annualized basis and will start generating positive earnings and cash flows in 2010,” said Andrew White, President and CEO of Route1. “We are proud to be recognized as a leader in the provision of security solutions to a complex organization such as DHS, and look forward to further adding value to other government agencies in the U.S.”

They say that the proof is in the pudding. So we’ll see if this happens for them. All I know is that I use their stuff and it’s  great, so perhaps this is another step to that “big thing” that I spoke about when they originally landed that deal.

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