Route1 Inc. — Interim / Quarterly Report 2021

May 20, 2021

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Interim Condensed Consolidated Financial Statements of

Route1 Inc.

March 31, 2021 and 2020

NOTICE OF NO AUDITOR REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

These unaudited interim condensed consolidated financial statements, including comparatives, have been prepared in accordance with International Accounting Standards (“IAS”) 34 ‘Interim Financial Reporting’ (“IAS 34”) using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim condensed consolidated financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying unaudited interim condensed consolidated financial statements of Route1 Inc. (the “Company”) have been prepared by and are the responsibility of the Company’s management. The unaudited interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada (these statements are prepared under International Financial Reporting Standards (IFRS)) and reflect management’s best estimates and judgment based on information currently available. The Company’s independent auditor has not performed a review of these interim condensed consolidated financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

TABLE OF CONTENTS

Route1 Inc.

Interim Condensed Consolidated Statements of Financial Position Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Interim Condensed Consolidated Statements of Changes in Equity Interim Condensed Consolidated Statements of Cash Flows Notes to the Interim Condensed Consolidated Financial Statements	Page
	1 2 3 4 5-24

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Route1 Inc.

As at March 31, 2021 and December 31, 2020 (stated in Canadian dollars)

Note	March 31, 2021 Unaudited December 31, 2020 Audited
Assets Current assets Cash and cash equivalents Accounts receivable Other receivables Inventory 3 Prepaid expenses Contract costs 11 Other current assets	512,853 $1,137,474 3,215,451 3,310,701 371,680 657,573 763,185 678,801 372,340 476,680 104,467 - 17,375 146,844
Total current assets	5,357,351 6,408,073
Non-current assets Deferred tax asset Right-of-use assets 5 Furniture and equipment 5 Intangible assets 6 Goodwill 7	1,484,000 1,484,000 1,993,472 2,152,444 817,262 893,259 1,771,676 1,268,684 2,962,482 1,969,734
Total non-current assets	9,028,892 7,768,121
Total assets	$14,386,243 $14,176,194
Liabilities Current liabilities Bank indebtedness 10 Accounts payable and other liabilities Contract liability 11 Lease liabilities 4 Notes payable 12	791,556 $777,299 4,153,810 4,063,359 3,676,858 3,627,223 508,398 552,980 756,831 758,044
Total current liabilities	9,887,453 9,778,905
Non-current liabilities Deferred tax liability Contract liability 11 Lease liabilities 4 Notes payable 12	153,126 159,736 97,883 100,051 1,625,966 1,740,174 179,159 256,796
Total non-current liabilities	2,056,134 2,256,757
Total liabilities	11,943,587 12,035,662
Shareholders’ equity Capital and reserve Common shares 13,14 Warrants 14 Contributed surplus – stock compensation reserve 14 Accumulated other comprehensive income (loss) Deficit	23,901,574 23,370,074 1,149,704 1,683,704 15,512,321 15,311,537 (112,703) (78,625) (38,008,240) (38,146,158)
Total shareholders’ equity	2,442,656 2,140,532
Total shareholders’ equity and liabilities	$14,386,243 $14,176,194

Commitments and contingencies 17

The accompanying notes are an integral part of these consolidated financial statements

1

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

Route1 Inc.

As at March 31, 2021 and March 31, 2020 (stated in Canadian dollars)

	Note	March 31, 2021	March 31, 2020
Revenue
Subscription revenue and services	20	$2,757,540	$1,957,722
Devices and appliance	20	3,786,392	4,401,363
Other	20	67,342	4,237
Total revenue		6,611,274	6,363,322
Cost of revenue	3	3,647,445	3,997,752
Gross profit		2,963,829	2,365,570
Operating expenses
General administration		1,470,987	1,359,220
Research and development		203,906	170,562
Selling and marketing		866,850	803,833
Total operating expenses before stock-based compensation		2,541,743	2,333,615
Stock-based compensation		200,784	109,038
Total operating expenses		2,742,527	2,442,653
Operating profit (loss) before other income (expense)		221,302	(77,083)
Other income (expense)
Patent litigation	8	-	(104,101)
Interest expense		(46,088)	(44,701)
Foreign exchange gain (loss)		(1,024)	42,881
Gain (loss) on asset disposal		(2,877)	154
Acquisition expense	9	(38,097)	-
Total other income (expense)		(88,086)	(105,767)
Income (loss) before income taxes		133,216	(182,850)
Income tax recovery		4,702	-
Net income (loss) for the period		137,918	(182,850)
Other comprehensive income (loss)
Foreign currency translation		(34,078)	88,031
Comprehensive income (loss)		$103,840	($94,819)
Basic earnings (loss) per share	16	$0.00	($0.01)
Diluted earnings per share	16	$0.00	-
Weighted average number of common shares outstanding		38,754,504	35,859,005
Diluted average number of shares outstanding		39,111,446	-

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Route1 Inc.

For the Periods ended March 31, 2021 and March 31, 2020 (stated in Canadian dollars)

	Note	Common Shares	Warrants	Contributed Surplus	Accumulated Other Comprehensive Income (loss)	Deficit	Total shareholders’ equity
Balance at January 1, 2020		$22,042,233	$534,000	**$14,840,861 **	$1,547	($36,438,916)	$979,725
Repurchase of common shares
for cancellation	13	(43,990)	-	-	-	-	(43,990)
Stock-based compensation	14	-	-	109,038	-	-	109,038
Comprehensive income (loss)		-	-	-	**88,031 **	(182,850)	(94,819)
Balance at March 31, 2020		$21,998,243	$534,000	$14,949,899	$89,578	($36,621,766)	$949,954

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

	Note	Common Shares	Warrants	Contributed Surplus	Accumulated Other Compre- hensive Income (loss)	Deficit	Total Shareholders’ Equity
Balance at January 1, 2021		$23,370,074	$1,683,704	$15,311,537	($78,625)	($38,146,158)	$2,140,532
Stock-based compensation	14	-	-	200,784	-	-	200,784
Exercise of warrants	14	534,000	(534,000)	-	-	-	-
Issuance costs	14	(2,500)	-	-	-	-	(2,500)
Comprehensive income (loss)		-	-	-	(34,078)	137,918	103,840
Balance at March 31, 2021		$23,901,574	**$1,149,704 **	$15,512,321	($112,703)	($38,008,240)	$2,442,656

The accompanying notes are an integral part of these consolidated financial statements

3

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

Route1 Inc.

For the three months ended March 31, 2021 and March 31, 2020 (stated in Canadian dollars)

	March 31, 2021	March 31, 2020
Net cash (outflow) inflow related to the following activities
Operating activities
Net income (loss)	$137,918	($182,850)
Items not affecting cash and cash equivalents
Depreciation and amortization	341,625	326,990
Interest accretion on notes payable	4,770	8,984
Interest on lease liabilities	20,026	6,901
Deferred taxes	(4,702)	-
Stock-based compensation	200,784	109,038
Net changes in working capital balances
Decrease in accounts receivable	58,291	2,208,596
Increase in other receivables	282,258	536
Increase in inventory	(91,354)	(21,534)
Increase in contract costs	(104,467)	-
(Increase) decrease in other assets	129,469	(475)
(Increase) decrease in prepaid expenses	103,219	(50,582)
Increase in deferred expenses	-	(56,246)
(Decrease) increase in accounts payable and other liabilities	135,695	(1,689,616)
Increase (decrease) in contract liability	52,387	(187,616)
Net cash generated by operating activities	1,265,919	472,126
Investing activities
Acquisition of furniture, and equipment	(132,863)	(33,871)
Disposal of furniture and equipment	59,113	2,737
Acquisition of right of use assets	-	(432,446)
Acquisition of intangible assets	(14,951)	(175,371)
Cash paid in business combination	(1,637,220)	-
Cash acquired in business combination	25,984	-
Otherassets	-	5,921
Net cash used by investing activities	(1,699,937)	(633,030)
Financing activities
Repayment of notes payable	(76,461)	(78,008)
Repayment of lease liabilities	(155,170)	-
Repurchase of common shares for cancellation	-	(43,990)
Increase in lease liabilities	-	312,379
Share issuance costs	(2,500)	-
(Repayment of) proceedsfrombank indebtedness	23,496	(25,763)
Net cash (used) generated by financing activities	(210,635)	164,618
Net increase (decrease) in cash and cash equivalents for the period	(644,653)	3,714
Effects of exchange rate changes on cash	20,032	(13,697)
Cash and cash equivalents, beginning of period	1,137,474	125,544
Cash and cash equivalents, end of period	$512,853	$115,561

4

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

1. NATURE AND DESCRIPTION OF THE COMPANY

Route1 Inc. (“Route1” or “the Company”) is a publicly traded company on the TSX Venture Exchange and the OTCQB Venture Market. The Company is incorporated under the laws of the Province of Ontario by articles of amalgamation dated January 1, 2006. The registered office of the Company is 8 King Street East, Suite 600, Toronto, Ontario, M5C 1B5.

Route1 is an advanced North American technology company that empowers their clients with data-centric solutions necessary to drive greater profitability, improve operational efficiency and gain sustainable competitive advantages, while always emphasizing a strong cybersecurity and information assurance posture. Route1 delivers client outcomes through real-time secure delivery of actionable intelligence to decision makers, whether it be in a manufacturing plant, in-theater or in a university parking lot.

With offices and staff in Boca Raton, FL, Scottsdale, AZ, Chattanooga, TN, Cincinnati, OH, Denver, CO, Glen Allen, VA, and Toronto, Canada, Route1 provides leading-edge solutions to public and private sector clients around the world. Route1 is listed in Canada on the TSX Venture Exchange under the symbol ROI and on the OTCQB in the United States under the symbol ROIUF.

On March 29, 2021 the Company completed the acquisition of 100% of the membership interests of DataSource Mobility, LLC.(“DSM”). There were no material events between acquisition date and March 31, 2021.

The Company has three operating segments: Route1 Inc. and Route 1 Security Corporation, Portable Computer Systems, Inc. (“PCS”), and Group Mobile Int’l, LLC (“GMI”). An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and for which discrete financial information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer.

The Company has one reportable segment.

Since December 31, 2019, the spread of COVID-19 has severely impacted many local economies around the globe. In many countries, including Canada and the United States, businesses are being forced to cease or limit operations for long or indefinite periods of time. Global stock markets have also experienced significant volatility. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions.

The COVID-19 pandemic has affected the Company’s business both positively and negatively. The Company’s secure remote access technology has benefited from the requirements to telework. Sales of MobiKEY © subscriptions and related enabling devices have increased and will continue to be reflected in the financial results for 2021 and beyond.

The impact of COVID-19 on the balance of the Company’s business had initially been the disruption in the supply chain for ruggedized devices and accessories during the first quarter of 2020and that has now mostly been corrected. In addition, client facility shutdowns and deferral of installation services for certain license plate recognition projects have also occurred as a result of the virus. As various states across the United States are taking steps to reopen the economy, facilities are reopening and installation activities are moving

5

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

forward. Recently the Company has experienced increased lead times for deliveries of products from certain Manufacturers.

See https://www.route1.com/terms-of-use/ for notice of Route1’s intellectual property.

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 – “ Interim Financial Reporting” (“IAS 34”) using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures included in annual financial statements prepared in accordance with IFRS have been condensed or omitted and these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020.

The accounting policies applied in preparation of these interim condensed consolidated financial statements are consistent with those applied and disclosed in the Company’s consolidated financial statements for the year ended December 31, 2020.

The preparation of interim condensed consolidated financial statements in conformity with IAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The interim results are not necessarily indicative of results for a full year. The critical judgments and estimates applied in the preparation of the Company’s interim condensed consolidated financial statements are consistent with those applied to the Company’s consolidated financial statements for the year ended December 31, 2020.

Certain comparative figures have been adjusted to conform to the current period’s presentation.

These interim condensed consolidated financial statements are presented in Canadian dollars (“Cdn $”), which is also the functional currency of the Company.

3. COST OF REVENUE

Cost of revenue includes the cost of devices, salaries of select staff, hosting of our MobiNET© and royalty related fees. For the three months ended March 31, 2021, the cost of revenue recognized as an expense was $3,647,445 (March 31, 2020 - $3,997,752).

6

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

4. LEASES

The Company has entered into a variety of premise lease agreements for office locations in Toronto, Ontario; Burlington, Ontario; Scottsdale, Arizona; Chandler, Arizona; Cincinnati, Ohio; Chattanooga, Tennessee; Boca Raton, Florida; and Denver, Colorado. In addition to the basic monthly rents, as part of some of the leases, the Company must pay a proportionate share of property taxes, operating costs, utilities and additional services.

The minimum annual basic rent commitments are as follows:

2021 2022 2023 and beyond Minimum lease payments Less: interest portion at rates between 3.81% and 5% Net minimum lease payments Less: Short-term or low value lease payments Less: current portion Long-term portion	March 31, 2021
	$651,857 527,395 1,761,517
	2,940,769 193,993
	2,746,776 612,412
	2,134,364 508,398
	$1,625,966

The office locations have been recognized in right-of-use assets at the present value of minimum lease payments, less accumulated depreciation. Also, in relation to those leases under IFRS 16, the Company has recognized depreciation and interest costs instead of operating lease expense. During the three months ended March 31, 2021, the Company recognized $135,076 (March 31, 2020 - $72,886) of depreciation and $19,642 (March 31, 2019 - $7,646) of interest expense from these leases. The Company also recognized $202 (March 31, 2019 - $508) of interest income related to a sublease of the Burlington, Ontario premises which commenced in January 2019.

The expense relating to payments not included in the measurement of the lease liability is as follows:

Short-term leases Non-lease components	March 31, 2021
	- $56,310
	$56,310

7

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

5. RIGHT-OF-USE, FURNITURE AND EQUIPMENT ASSETS

Cost	Right-of- use Asset Computer Equipment Furniture and Equipment TaaS Computer Equipment	Total
Balance at December 31, 2020 Additions Additions from acquisition Disposals Effect of exchange rate changes	$2,610,754 $2,494,964 $527,559 $1,493,096 - 27,685 105,178 - - - 1,258 - - - - (121,562) (28,945) - (6,745) (17,548)	$7,126,373 132,863 1,258 (121,562) (53,239)
Balance at March 31, 2021	2,581,809 2,522,649 627,250 1,353,986	7,085,963
Accumulated depreciation and impairment	Right-of- use Asset Computer Equipment Furniture and Equipment TaaS Computer Equipment	Total
Balance at December 31, 2020 Depreciation expense Disposals Effect of exchange rate changes Balance atMarch31,2021	(458,310) (1,880,807) (377,110) (1,364,443) (134,549) (68,338) (22,511) (51,196) - - - 59,572 4,522 - 1,444 16,766	(4,080,670) (276,593) 59,572 **22,732 **
	(588,337) (1,949,145) (398,177) (1,339,301)	(4,274,959)
Net book value	Right-of- use Asset Computer Equipment Furniture and Equipment TaaS Computer Equipment	Total
Balance at December 31, 2020	$2,152,444 $614,157 $150,449 $128,653	$3,045,703
Balance at March 31, 2021	$1,993,472 $573,504 $229,073 $14,685	**$2,810,734 **

For the three months ended March 31, 2021, depreciation and amortization expense of $276,593 (March 31, 2019 - $268,013) was recognized in general administration expense.

8

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

6. INTANGIBLE ASSETS

Cost	Patents Software Brand Customer Relationships	Vendor Relationships	Trademarks & Tradenames	Total Intangible Assets
Balance at December 31, 2020	$190,266 $916,473 $122,225 $497,821	$445,620	$163,588 $2,334,697
Additions Additions from acquisition Effect of exchange rate changes Balance at March 31, 2021	3,142 11,809 - - - - - 566,067 - - - - (8,232) (5,495)		- 14,951 - 566,067 (1,963) (15,689)
	196,550 928,282 122,225 1,055,657	440,125	157,188	2,900,026
Accumulated depreciation and impairment	Patents Software Brand Customer Relationships	Vendor Relationships	Trademarks & Tradenames	Total Intangible Assets
Balance at December 20, 2020	(54,248) (685,313) (118,729) (117,008)	(66,843)	(23,872) (1,066,014)
Depreciation expense	(11,809) (31,630) (2,597) (3,957)) (11,082)		(3,958) (65,032)
Effect of exchange rate changes Balance at March 31, 2021	- - - 1,470	903	322 2,695
	(66,057) (716,943) (121,326) (119,495)	(77,022)	(27,508) (1,128,350)
Net book value	Patents Software Brand Customer Relationships	Vendor Relationships	Trademarks & Tradenames	Total Intangible Assets
Balance at December 31, 2019	$139,160 $231,160 $3,496 $380,813	$378,777	$135,278 $1,268,684
Balance at March 31, 2021	$130,493 $211,339 $899 $936,162 $363,103		$129,680 $1,771,676

For the three months ended March 31, 2021, depreciation and amortization expense of $65,032 (March 31, 2020 - $58,977) was recognized in general administration expense.

7. GOODWILL

A summary of the Company’s goodwill is as follows:

Balance, December 31, 2020 Acquisition of DSM (Note 9) Effect of exchange rates Balance at March 31, 2021	$1,969,734 1,018,574 (25,826)
	$2,962,482

The Company performs impairment assessments of goodwill at year-end or when an event occurs that impacts the value of the entities that gave rise to the goodwill.

9

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

8. PATENT LITIGATION

Patent litigation expenses consist of legal fees and other third-party costs incurred to prosecute cases of alleged patent infringement. Legal costs to prosecute the alleged patent infringement complaint are expensed as incurred with any potential gain on settlement to be recognized on realization.

Patent litigation expenses for the period ended March 31, 2021, were $nil (March 31, 2020 - $104,101). In 2020, patent litigation expenses include the costs related to the settlement with AirWatch net of the recovery of the litigation financing liability. The litigation was settled on December 29, 2021 and no further expenses have been incurred after that date.

9. BUSINESS COMBINATION – DataSource Mobility, LLC

On March 29, 2021, the Company completed the acquisition of 100% of the membership interests of DataSource Mobility, LLC (“DSM”). The purchase consideration was USD $1,300,000 cash paid at closing (CAD $1,637,220). The USD/CAD exchange rate on March 29, 2021 was US $1 = CAD $1.2594.

Based in Clarksville, Tennessee, DSM is primarily a reseller of ruggedized tablets and laptops along with associated accessories. DSM offers guidance and state-of-the-art mobile devices for a wide range of sectors including public safety, utilities, field services, logistics and healthcare as well as state and local governments. DSM services customers primarily located in the Southeastern United States.

The acquisition of DSM was accounted for using the acquisition method of accounting in accordance with IFRS 3 with the results of operations consolidated with those of the Company effective March 29, 2021. No Material transactions have occurred between the acquisition date and March 31, 2021. The goodwill recorded on the balance sheet represents the purchase price paid in excess of the fair value of the assets. Transaction costs of $38,097 related to the acquisition of DSM have been expensed and included in operating expenses in the consolidated statements of comprehensive income for the period ended March 31, 2021.

The table below summarizes the estimated fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed.

Assets Acquired Cash and cash equivalents Accounts receivable Prepaid expenses Capital assets Intangible Assets Goodwill Total assets	US Dollars Canadian Dollars
	$20,632 $25,984 182,094 229,329 4,750 5,982 1,000 1,258 450,153 566,924 808,777 1,018,574
	1,467,406 1,848,051

Liabilities Assumed

10

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

Accounts payable and other liabilities Accrued Liabilities Total liabilities Fair value of net assets acquired Net consideration issued	163,520 205,937 3,886 4,894
	167,406 210,831
	1,300,000 1,637,220
	$1,300,000 $1,637,220

10. BANK INDEBTEDNESS

The Company’s credit facility consists of a revolving demand facility in the amount of $875,000 (December 31, 2020 - $875,000) and a $150,000 credit card facility (December 31, 2020 - $150,000). The operating facility carries an interest rate equal to the lender’s prime rate of interest plus 1.5% (December 31, 2020 – prime rate of interest plus 1.5%). As at March 31, 2021, the interest rate was 3.95%. The credit facility is secured by the assets of Route1 Inc. and guaranteed by GMI. As at March 31, 2021, the balance drawn on the revolving demand facility was $nil (December 31, 2020 - $nil).

The Company’s wholly owned subsidiary, PCS, has an asset-based revolving credit facility in the amount of US $1,500,000. The facility carries an interest rate of 50 basis points over the prime rate published daily in the Wall Street Journal. As at March 31, 2021, the interest rate was 3.75%. The availability under the facility is based on a percentage of the aggregate of certain accounts receivable and inventory. The facility is secured by the assets of PCS and is guaranteed by the Company and a wholly owned subsidiary of the Company. As at March 31, 2021, the balance drawn on the revolving demand facility was $791,556 (December 31, 2020 - $777,299). PCS is required to maintain a Fixed Charge Coverage Ratio equal to or greater than 1.10:1.

On December 29, 2020, the Company entered into a settlement agreement in respect of its patent litigation. A letter of credit in the amount of US $1,669,840 (CAD $2,226,065) securing the required bond was drawn pursuant to the settlement agreement.

11. CONTRACT LIABILITIES AND CONTRACT COSTS

Contract liabilities are comprised of:

Balance, beginning of year Revenue deferred in previous period and recognized in current period Net additions arising from operations Effect of exchange rates Total contract liability Revenue to be recognized in the future: Within one year Between two to five years Total	March 31, 2021 December 31, 2020
	$3,727,274 $1,908,315 (1,945,239) (1,808,726) 1,992,874 3,585,676 (168) 42,009
	$3,774,741 $3,727,274
	$3,676,858 $3,627,223 97,883 100,051
	$3,774,741 $3,727,274

11

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

Subscription revenue and services contract liability is mainly comprised of subscriptions to MobiKEY© services and support contracts for license plate recognition customers.

Contract costs arise primarily as the result of the deferral of commissions and cost of sales on MobiKEY© services and device sales. In the period ending March 31, 2021, these expenses are disclosed in Current Assets in the amount of $104,467. In period ended March 31, 2020, these costs were included in other current assets ($64,241).

12. NOTES PAYABLE

Promissory note A (US $170,000, 2020 US $170,000) Promissory note B (US $300,000, 2020 US $360,000) Less: unamortized deferred debt discount Promissory note C Less: current portion of notes payable Long-term portion	March 31, 2021 December 31, 2020 $213,775 $216,444 377,250 458,352 591,025 674,796 (12,407) (17,328) 657,468 657,468 357,372 357,372 935,990 1,014,840 (756,831) (758,044) $179,159 $256,796

The U.S. dollar denominated debt was translated into Canadian dollars at the period end exchange rate of US $1 = C $1.2575 (December 31, 2020 – US $1 = C $1.2732.)

Pursuant to the acquisition of PCS on June 28, 2019, the Company’s wholly owned subsidiary, PCS, issued two notes to the vendor of PCS. The terms of these notes are as follows:

Unsecured Promissory Note A Principal Amount US $250,000 Interest Rate 3% per annum, payable annually Repayment US $90,000 on June 28, 2022

Unsecured Promissory Note B Principal Amount US $720,000 Interest Rate 2.37% per annum, payable monthly Repayment US $20,000 per month for 36 months commencing July 31, 2019

The notes are subordinated to the asset-based credit facility in PCS. The notes are guaranteed as to payment by the Company’s wholly owned subsidiary, GMI.

On September 16, 2020, Route1 entered into a promissory note agreement with a private lender in the amount of $650,000 (Promissory Note C). The note bears interest at 10% per annum and any amounts drawn must remain outstanding for a minimum of six months from the date of the agreement and thereafter may be repaid without premium, penalty or bonus. The note matures on September 15, 2021 unless the term is extended by mutual agreement. The promissory note is secured by a pledge of the shares of the

12

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

Company’s wholly owned subsidiary, Route 1 Security Corporation, and a general security agreement over all current and hereafter acquired personal property of the Company. The promissory note is subordinated to the Company’s existing bank credit facilities in both Canada and the United States. At March 31, 2021, the balance drawn on the promissory note was $357,372. The note was entered into in order to provide part of the collateral for the bond posted in connection with the Company’s litigation in the United States. Principal debt repayment in each of the next two fiscal years is as follows:

2021 2022	Cash Repayment Reduction of Recorded Liability
	$684,322 $682,361 264,075 253,629
	$948,397 $935,990

13. SHARE REPURCHASE PROGRAM

On September 24, 2019, the Company received approval from the TSX Venture Exchange to make another 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 1,816,855. Purchases under the NCIB may occur during the 12-month period commencing September 27, 2019 and ending September 26, 2020, or the date upon which the maximum number of common shares has been purchased by the Company. Purchases for cancellation under the NCIB during the period from September 27, 2019 to September 26, 2020 were 1,167,500 common shares.

In May 2020, the Company announced an amendment to the Normal Course Issuer Bid (NCIB), increasing the maximum purchase price per common share purchased under the NCIB to $0.75 from $0.60.

On September 28, 2020, the Company received approval from the TSX Venture Exchange to make another 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 1,755,980. Purchases under the NCIB may occur during the 12-month period commencing September 27, 2020 and ending September 26, 2021, or the date upon which the maximum number of common shares has been purchased by the Company. Purchases for cancellation under the NCIB during the period from September 27, 2020 to December 31, 2020 were 15,000 common shares.

For the three months ended March 31, 2021, the Company purchased no shares for cancellation (March 31, 2020 – 105,491 at an average price of $0.42 per share).

13

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

14. SHARE CAPITAL, WARRANTS AND CONTRIBUTED SURPLUS

Pursuant to a resolution passed at the Company’s annual meeting on November 26, 2018, the Company amended its Articles of Amalgamation on August 13, 2019 to consolidate the number of shares outstanding on the basis of one new common share for ten old common shares. As a result of the share consolidation, all amounts have been adjusted retroactively.

The Company’s authorized share capital consists of the following:

• Unlimited number of common shares with voting rights and no par value.

• Unlimited number of non-cumulative, non-voting first preferred shares with no fixed dividend rate, issuable in series.

• Unlimited number of non-cumulative, non-voting second preferred shares with no fixed dividend rate, issuable in series.

• Unlimited number of non-cumulative, non-voting Series A first preferred shares with no fixed dividend rate, issuable in series and convertible into common shares at the option of the holder on a one-for-one basis at any time after October 31, 2000.

Balance, December 31, 2019 Shares issued November 4, 2020 Shares issued December 16, 2020 Shares repurchased for cancellation Share issuance costs Balance, December 31, 2020 Share issuance costs Warrant exercise Balance, March 31. 2021	Number of Common Shares 35,905,100 60,000 3,529,411 (800,491) - 38,694,020 - 1,355,443 40,049,463	Common Shares $
		$22,042,233 56,196 1,823,116 (496,468) (55,003)
		$23,370,074
		(2,500) 534,000
		$23,901,574

• There are 3,312,500 common share purchase options (“Options”) outstanding to acquire 3,312,500 common shares at various prices.

• There are 3,574,411 common share purchase warrants outstanding with an expiry date of June 16, 2022, enabling the holders to purchase 3,573,411 common shares at an exercise price of $1.00 per share.

Private Equity Placement

On December 16, 2020, the Company completed a private placement of 3,529,411 units (comprised of one common share and one warrant) for gross proceeds of $3,000,000. A portion of the proceeds were allocated to warrants based on the valuation below with the residual value allocated to common shares.

14

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

Warrant Valuation

Share price on issue date Risk free interest rate Expected life (years) Expected volatility Dividend yield Fair value of warrants issued	December 16, 2020
	$1.04 0.25% 1.5 80% Nil
	$0.334

The Black-Scholes option pricing model is used by the Company to determine the fair value of the warrants issued as part of the equity private placement in December 2020. A total fair value of $1,191,889 was determined.

Warrants Outstanding

Balance, January 1, 2020 Issued Issuance Costs Balance, December 31, 2020 Exercised Balance, March 31, 2021	Number of Warrants Warrant $
	3,000,000 $534,000 3,574,411 1,191,889 - (42,185)
	6,574,411 1,683,704 (3,000,000) (534,000)
	3,574,411 **$1,149,704 **

Stock-based compensation

The Company has a Stock Option Plan (the “Plan”) that was created in 1997 to attract, retain and motivate officers, salaried employees and directors who are in a position to make important contributions toward the success of the Company. Under the Plan, options may be granted to directors, officers, employees, and consultants of the Company at an exercise price determined by the Board provided that such exercise price should not be less than permitted under the rules of any stock exchange where the shares are listed. The period during which an option may be exercised (the “Option Period”) is determined by the Board at the time the option is granted, subject to any vesting limitations which may be imposed by the Board in its sole unfettered discretion at the time such option is granted. Options are exercisable as determined by the Board at the date of the grant. Shares covered by options granted pursuant to the Plan may not exceed 10% of the issued and outstanding shares of the Company at the time of the grant, calculated on a non-diluted basis.

15

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

The following tables reflect the movement and status of the stock options:

Options Outstanding Balance, beginning of the year Options granted during the year Options expired during the year Options exercised during the year Options forfeited during the year Balance, end of the year	March 31, 2021 Number of Options Weighted Average Exercise Price 3,312,500 $0.61 - - - - - - - - 3,312,500 $0.61	December 31, 2020	December 31, 2020
	Number of Options 3,312,500 - - - - 3,312,500	Number of Options 3,397,500 1,925,000 (1,310,000) (60,000) (640,000) 3,312,500	Weighted Average Exercise Price
			$0.55 0.71 0.55 0.50 0.55
			$0.61

Exercise Price $0.50 $0.55 $0.62 $0.65 $0.68 $1.05 Exercise Price $0.50 $0.55 $0.62 $0.65 $0.68 $1.05	Options Outstanding March 31, 2021 Number of Options Weighted Average Remaining Contractual Life (Years) 687,500 0.7 200,000 2.4 400,000 4.4 500,000 3.1 1,325,000 4.0 200,000 2.7 3,312,500 3.2 Options Outstanding December 31, 2020 Number of Options Weighted Average Remaining Contractual Life (Years) 687,500 0.9 200,000 2.7 400,000 4.7 500,000 3.3 1,325,000 4.3 200,000 3.0 3,312,500 3.4	Options Exercisable March 31, 2021	Options Exercisable March 31, 2021
		Number of Options Weighted Average Remaining Contractual Life (Years) 647,500 0.6 60,000 2.4 - - 150,000 3.0 - - - - 857,500 1.2 Options Exercisable December 31, 2020	Weighted Average Remaining Contractual Life (Years)
			0.6 2.4 - 3.0 - -
			1.2
	Number of Options 687,500 200,000 400,000 500,000 1,325,000 200,000 3,312,500	Number of Options 647,500 60,000 - 150,000 - - 857,500	Weighted Average Remaining Contractual Life (Years)
			0.8 2.7 - 3.3 - -
			1.4

For the quarter ended March 31, 2021, the Company recorded stock-based compensation expense of $200,784 (March 31, 2020 - $109,038).

16

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

The Black-Scholes option pricing model used by the Company to determine fair values was developed for use in estimating the fair value of freely traded options, which are fully transferable and have no vesting restrictions. The Company’s stock options are not transferable and cannot be traded and are subject to vesting restrictions and exercise restrictions under the Company’s black-out policy which would tend to reduce the fair value of the Company’s stock options. Changes to subjective input assumptions used in the model can cause a significant variation in the estimate of the fair value of the options.

All outstanding share options expected to vest were measured in accordance with IFRS 2, “Share-based Payment” at their market-based measure at the acquisition date. Options were priced using the BlackScholes option pricing model. Where relevant, the expected life used in the model has been adjusted based on management's best estimate for the effects of non-transferability, exercise restrictions, and behavioral considerations. Expected volatility is based on the historical share price volatility.

Option Valuation

Share price on issue date Risk free interest rate Expected life (years) Expected volatility Forfeiture rate Dividend yield Fair value of options issued during the period	2020
	$0.60 - $1.04 0.34% - 0.42% 3-5 119%-133% Nil Nil
	$0.515-$0.731

Contributed surplus

Contributed surplus represents expired warrants and the amortized fair value of stock options granted under the stock option plan, determined using the Black-Scholes option pricing model. The fair value is amortized to income on a graded, vested basis over the vesting period with a corresponding increase to contributed surplus. Upon exercise of stock options, the consideration paid by the holder is included in share capital and the related contributed surplus associated with the stock options exercised is transferred into share capital.

Balance, beginning of the period Options expensed in the period Options exercised in the period Balance, end of the period	March 31, 2021 $15,311,537 200,784 - $15,512,321	December 31, 2020
		$14,840,861 496,872 (26,196)
		$15,311,537

17

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

15. RELATED PARTY TRANSACTIONS

The Company has directors and officers who are considered related parties. The Company had the following transactions and/or outstanding amounts with related parties. All transactions are recorded at their exchange amounts.

• The Company incurred expenses (including CPP and EHT) payable to and on behalf of the independent members of the Board of Directors of $90,237 for the quarter (March 31, 2020 - $93,282). These transactions are in the normal course of operations and are paid or payable for directorship services. As at March 31, 2021, accounts payable included $100,430 owing to directors (March 31, 2020 - $97,813). The Company also incurred stock-based compensation expense related to stock options granted to directors in the amount of $54,189 for the quarter ended March 31, 2021(March 31, 2020 - $31,512).

• The Company made payments to or incurred expenses for key management (President and Chief Executive Officer, Chief Technology Officer and the Chief Financial Officer) in the quarter ended March 31, 2021 as follows, with 2020 comparatives:

Short-term employee benefit Stock-based compensation expense	March 31, 2021 March 31, 2020
	$256,486 $248,830 89,577 18417
	$346,063 $267,247

16. EARNINGS PER SHARE

The Company uses the treasury stock method to calculate basic and diluted earnings per share. Basic earnings per share have been calculated based on the weighted average number of common shares without the inclusion of dilutive effects. Diluted earnings per share are calculated based on the weighted average number of common shares plus dilutive common share equivalents outstanding which consist of options and warrants to purchase common shares. The dilution calculation increased the fully diluted weighted average number of shares outstanding to 39,111,446 and an earnings per share of $0.00. For the period ending March 31, 2020 all outstanding options and warrants were considered anti-dilutive because the Company recorded a loss in the period.

Net income (loss) Weighted average number of common shares outstanding Diluted average number of shares outstanding Basic earnings (loss) per share Diluted earnings per share	Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
	$137,917 ($182,850) 38,679,201 35,859,005 39,111,446 $0.00 ($0.01) $0.00 --

18

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

17. COMMITMENTS AND CONTINGENCIES

(i) Legal matters

In the normal course of operations, the Company may be subject to litigation and claims from customers, suppliers and former employees. Although it is not possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of such contingencies would not have a material adverse effect on the results of operations, financial position or liquidity of the Company.

(ii) Foreign exchange

From time to time the Company may enter into U.S. dollar forward contracts to mitigate possible foreign exchange risk. The timing and amount of foreign exchange contracts are estimated based on existing or anticipated sales, current conditions in the Company’s markets, the estimated timing of payments denominated in Canadian dollars and the Company’s past experience. The Company’s policy is not to utilize financial instruments for trading or speculative purposes.

18. CAPITAL MANAGEMENT

The Company's objectives when managing capital is to maintain a flexible capital structure which optimizes the cost of capital at acceptable risk. The Company manages its share capital, warrant reserve and contributed surplus as capital, the balance of which is $40,563,599 at March 31, 2021 ($40,365,315 at December 31, 2020).

The Company manages its capital structure and makes adjustments due to changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares, issue new debt, and/or issue new debt to replace existing debt with different characteristics.

Capital management objectives, policies and procedures have not changed from the preceding period.

In the normal course of business operations of GMI and PCS, the Company may be required to guarantee certain trade payables to the value-added distributors from which GMI and PCS purchase product to sell to their customers. Such guarantees would be enforced only if GMI or PCS could not pay the distributor for goods acquired from such distributor and the amounts under such guarantees would vary from time to time based on the volume of purchases from the particular distributor. The Company has entered into these continuing, unconditional guarantees with several of the larger vendors/suppliers to GMI and PCS.

In the normal course of operations, GMI and PCS may enter into continuing purchase money security interests with distributors and original equipment manufacturers. These security interests relate specifically to the products purchased from each distributor and original equipment manufacturer and the amounts secured will vary from time to time with purchases.

19

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

19. FINANCIAL INSTRUMENTS - RISK MANAGEMENT

The carrying amount of financial instruments including cash and cash equivalents, accounts receivable, other receivables, bank indebtedness and accounts payable and other liabilities approximates fair value because of the short-term nature of these instruments.

The Company had an earn-out provision from the acquisition of GMI in fiscal 2018, which required a payment to the former owners of GMI should the gross profit of GMI be in excess of certain targets. The earn-out expired in March 2021, with no amounts being payable.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value measurement of a non‐financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within a three-level hierarchy, based on observability of significant inputs, as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; or

Level 3: Unobservable inputs for the asset or liability.

Inputs into the determination of the fair value require management judgment or estimation.

The Company has exposure to credit risk, liquidity risk and market risk associated with its financial assets and liabilities. The Board has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has established the Audit Committee which is responsible for monitoring the Company’s compliance with risk management policies. The Audit Committee regularly reports to the Board on its activities.

The Company’s risk management program seeks to minimize potential adverse effects on the Company’s financial performance and ultimately shareholder value. The Company manages its risks and risk exposures through a system of internal controls and sound business practices.

20

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

The Company’s financial instruments and the nature of the risks to which they may be subject are set out in the following table:

Cash and cash equivalents Accounts receivable Other receivables Bank indebtedness Accounts payable and other liabilities Notes payable	Credit Liquidity Foreign Exchange Interest Rate
	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Credit risk

Credit risk arises from cash held with banks and credit exposure to customers, including outstanding accounts and other receivables. The maximum exposure to credit risk is equal to the carrying value (net of allowances) of the financial assets. The objective of managing credit risk is to prevent losses on financial assets. The Company assesses the credit quality of counterparties, taking into account their financial position, past experience and other factors. During the quarter ended March 31, 2021, the largest single customer represented approximately $786,000 of revenue (March 31, 2020 - $464,000).

Cash and cash equivalents consist of bank balances. Credit risk associated with cash is minimized substantially by ensuring that these financial assets are held in highly rated financial institutions. At March 31, 2021, the Company had cash consisting of deposits with a Schedule 1 bank in Canada and a large money centre bank in the U.S. and a large regional bank in the U.S. of $512,853 (December 31, 2020 - $1,137,474).

Accounts receivable consist primarily of accounts receivable from invoicing for subscriptions, devices and services. Other receivables consist primarily of unbilled accounts receivable, marketing development funds, sales tax refunds to be received and an amount due for the refund of the excess of the posted bond over the patent litigation settlement amount. The Company’s credit risk arises from the possibility that a customer which owes the Company money is unable or unwilling to meet its obligations in accordance with the terms and conditions in the contracts with the Company, which would result in a financial loss for the Company. This risk is mitigated through established credit management techniques, including monitoring customer’s creditworthiness, setting exposure limits and monitoring exposure against these customer credit limits.

The Company measures a loss allowance based on the lifetime expected credit losses. Lifetime expected credit losses are estimated based on factors such as the Company’s past experience of collecting payments, the number of delayed payments in the portfolio past the average credit period, observable changes in national or local economic conditions that correlate with default on receivables, financial difficulty of the borrower, and it becoming probable that the borrower will enter bankruptcy or financial re-organization. Financial assets are written off when there is no reasonable expectation of recovery. Subsequent recoveries of amounts previously written off reduce other expenses in the statement of comprehensive income. As at March 31, 2021, the largest single customer’s account receivable represented $786,064 (December 31, 2020 $419,631) of the total accounts receivable. This account receivable was collected in full subsequent to the end of the period.

21

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

The following table outlines the details of the aging of the Company’s receivables as at March 31, 2021 and December 31, 2020:

Current Past due 1 – 60 days Greater than 60 days Less: Allowance for doubtful accounts Total accounts receivable, net	March 31, 2021 December 31,2020
	$1,518,622 $2,304,560 1,395,708 597,511 301,121 408,630 - -
	$3,215,451 $3,310,701

The following table outlines the details of the Company’s other receivables as at March 31, 2021 and December 31, 2020:

Other receivables Less: Reserve Total other receivables, net	March 31, 2021 December 31, 2020
	$961,174 $1,254,774 (590,034) (597,401)
	$371,680 $657,373

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time. In order to meet its financial liabilities, the Company has primarily relied and expects to continue to rely primarily on collecting its accounts receivable as they come due.

The Company’s ability to manage its liquidity risk going forward will require some or all of the following: the ability to generate positive cash flows from operations and secure capital and/or credit facilities on reasonable terms in the current marketplace. The following table details the Company’s contractual maturities for its financial liabilities, including interest payments and operating lease commitments, as at March 31, 2021:

Accounts payable and other liabilities Notes payable Lease commitments	2021 2022 2023 and Beyond Total
	$4,153,810 $- $- $4,153,810 682,361 253,629 - 935,990 651,857 527,395 1,761,517 2,940,769
	$5,488,028 $781,024 $1,761,517 $8,030,569

Bank indebtedness does not have a contractual maturity and as such has not been included in the above table.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the fair value of recognized assets and liabilities or future cash flows or the Company’s results of operation.

22

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Route1 Inc.

March 31, 2021 and 2020 (stated in Canadian dollars)

Foreign exchange

The functional currency of the parent company is Canadian dollars and the reporting currency is Canadian dollars. As at March 31, 2021, the Company had non-Canadian dollar net monetary liabilities of approximately US $1,600,000 (March 31, 2020 – liabilities of approximately US $207,000). An increase or decrease in the U.S. to Canadian dollar exchange rate by 5% as at March 31, 2021 would have resulted in a gain or loss in the amount of $83,000 (March 31, 2020 – gain or loss of $10,350).

Interest rate

The Company has cash balances and bank indebtedness which may be exposed to interest rate fluctuations. At March 31, 2021, cash balances were $512,853 (December 31, 2020 - $1,137,474) and bank indebtedness was$791,556 (December 31, 2020 – $777,299).

20. REVENUE AND SEGMENTED INFORMATION

Revenue for the recurring revenue and services is reported as a contract liability on the statement of financial position and is recognized as earned revenue for the period in which the subscription and/or service is provided. For the sale of devices, revenue or contract liability is recognized at the time transfer of ownership of the device occurs. At March 31, 2021, the Company had $3,774,741 (December 31, 2020 $3,727,374) in contract liabilities.

The following table provides a presentation of the Company’s revenue streams for the quarter ended March 31, 2021 and 2020:

Subscription revenue and services Devices and appliances Other	2021 2020
	Revenue % of Total Revenue % of Total $2,757,540 41.7 $1,957,722 30.8 3,786,392 57.3 4,401,363 69.1 67,342 1.0 4,237 0.1
	$6,611,274 100.0 $6,363,322 100.0

The following table provides a geographic presentation of the Company’s revenue streams for the year ended March 31, 2021 and 2020:

USA Canada	2021 2020
	Revenue % of Total Revenue % of Total $6,585,997 99.6 6,335,232 99.6 25,277 0.4 28,090 0.4
	$6,611,274 100.0 $6,363,322 100.0

The following table provides a geographic presentation of the Company’s right-of-use assets, furniture and equipment and intangible assets for the periods ending March 31, 2021 and December 31, 2020:

USA Canada	March 31, 2021 December 31, 2020
	Assets % of Total Assets % of Total $3,764,557 82.1 $3,511,194 81.4 817,853 17.9 803,193 18.6
	$4,582,410 100.0 $4,314,387 100.0

23