Route1 Inc (ROIUF)

[makinezmoney]

$ROUIF: NEWS.... Group Mobile Presentation (Webcast)

https://www.route1.com/wp-content/uploads/2018/03/Route1-March-26-2018-Webcast.pdf


$0.0217


******************************************************************




On March 22, 2018, Route1 closed the acquisition of Group Mobile Int’l, LLC (Group
Mobile) from XpresSpa Group, Inc. (XpresSpa Group).
– Route1 announced the signing of the definitive agreement to acquire Group
Mobile (the “Agreement”) on March 8, 2018.
• Group Mobile based in Chattanooga, TN and Chandler, AZ, supplies rugged mobile
technology solutions to leading automotive manufacturing companies and suppliers,
other leading manufacturing and distribution companies, as well as local and state
governments in the southeastern and southwestern United States


Group Mobile Background:
– Deployed over 1.5 million rugged mobile devices.
– https://groupmobile.com/.
– Based on historical results, quarterly revenue of USD $3.4 million to USD $4.5
million, gross profit margin of 16% to 22% and positive EBITDA.
– Increased margins driven by services offerings.
– Rapidly growing recurring revenue Technology as a Service model.
– Hardware supplier relationships with the leaders in rugged and warehouse
focused technology equipment manufacturers – Getac and Zebra.
– Strong distributor relationships including Ingram Micro, ScanSource and Synnex.


Transaction Rationale. Route1 is acquiring Group Mobile to:
A. Expand Route1’s service and product offerings;
B. Strengthen outside and inside sales;
C. Diversify revenue, customers, and verticals;
D. Expand the use of Route1’s core technologies into the manufacturing,
distribution, local and state governments and respective suppliers; and
E. Leverage Group Mobile’s current and future placement of rugged mobile devices
to sell Route1’s core technologies as an integrated offering




Fixed Consideration. Under the terms of the Agreement, Route1 issued to XpresSpa
Group:
– 25 million common shares, and
– 30 million, three-year common share purchase warrants with an exercise price of
CAD 5 cents per common share.
• XpresSpa Group now owns approximately 7% of Route1’s undiluted common shares.
The issued Route1 common shares will not be tradable until a date no earlier than 12
months after the closing date:
– 50% or 12.5 million common shares tradeable after 12 months, plus
– 2,083,333 common shares tradeable each month until 18 months after the date
of closing, subject to a change of control provision.



Contingent Consideration. There may also be one or more payments made to
XpresSpa Group based on the actual gross profit of Group Mobile meeting a
minimum threshold in each 12-month period during the first three years post-closing
or for the three years in aggregate post-closing. Specifically:
– An annual earn-out if the gross profit of Group Mobile is in excess of USD
$3,750,000 per 12-month period, then XpresSpa Group will receive 27.5% of the
actual gross profit amount greater than USD $3,750,000. If the gross profit
target is missed in the first or second year, no subsequent annual earn-out
payment(s) will be made; and
– A cumulative earn-out that is equal to 27.5% of the Group Mobile gross profit for
the first 36 months post-closing that is in excess of $11,250,000 less any annual
earn-out amounts previously made. Payments pursuant to the annual or
cumulative earn-out will be made in cash, 90 days after the respective period
end.




Additional Deal Terms.
– No assumption of indebtedness (other than trade payables or accruals incurred
in the ordinary course of business).
– A minimum working capital balance.
– An XpresSpa Group non-compete and non-solicitation for a period of three years.
– A voting agreement whereby, if XpresSpa Group owns in excess of 3% of the
outstanding shares of Route1, all common shares issued as part of the
acquisition are subject to a voting agreement with Route1 for the term of the
earn-out.




Route1 filed a complaint against AirWatch LLC (“AirWatch”) in Delaware court on March 27, 2017.
The complaint was served on AirWatch on June 1, 2017. The civil action number is 1:17-cv-00331-
RGA and was assigned to the Honorable Richard G. Andrews.
10
March 27, 2017 Route1 complaint filed
June 1, 2017 Route1 complaint served
August 28, 2017 Scheduling Order was issued
September 15, 2017 Initial Disclosures were made
September 22, 2017 AirWatch filed an Inter Partes Review (“IPR”) petition with the US Patent and Trademark Office (“USPTO”)
September 27, 2017 AirWatch and Route1 disclosures made re Default Standard of Discovery
September 27, 2017 Route1 identified the accused products and produced a file history for the its patent(s)
October 6, 2017 AirWatch petition for an IPR certified as received by the USPTO
October 17, 2017 AirWatch filed a Motion to Stay pending the IPR
October 24, 2017 AirWatch’s Motion to Stay filed on October 17, 2017 was denied
November 10, 2017 AirWatch produced technical documentation related to the accused products
December 11, 2017 Route1 produced its initial infringement contentions relating to the accused products to asserted claims
December 22, 2017 Route1 filed its response to AirWatch’s IPR petition
January 9, 2018 AirWatch produced its initial invalidity contentions
January 16, 2018 Parties exchanged proposed claim constructions
January 23, 2018 Joint claim construction chart filed
February 16, 2018 Route1 served opening Claim Construction Brief
March 19, 2018 AirWatch served answering Claim Construction Brief
March 20, 2018 Patent Trial and Appeal Board (“PTAB”) denies institution of an IPR on the Route1 patent



Route1 filed a complaint against AirWatch LLC (“AirWatch”) in Delaware court on March 27, 2017.
The complaint was served on AirWatch on June 1, 2017. The civil action number is 1:17-cv-00331-
RGA and was assigned to the Honorable Richard G. Andrews.
What does the PTAB ruling mean for Route1?
• The PTAB issued its decision determining that AirWatch had not demonstrated a reasonable
likelihood that it would prevail in establishing that any claims of the ‘216 patent are invalid and,
accordingly, denied the IPR petition; AirWatch has 30 days to file a motion for reconsideration.
• Stay on track for a court date in September 2019, when we can focus on proving infringement
and the quantum of damages