ID Watchdog Announces Results for Second Quarter 2013

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Aug 29, 2013, 06:00 ET

DENVER, Aug. 29, 2013 /PRNewswire/ --

$67,513 of free cash flow generated in the second quarter of 2013
Revenues increased 12.3%
Gross profit increased 99.2%

ID Watchdog, Inc. (TSX VENTURE: IDW) (PINKSHEETS: IDWAF) ("ID Watchdog" or the "Company"), provider of consumer-facing identity theft protection and resolution services, today announced its results for the 2nd quarter ended June 30, 2013. All amounts are in U.S. dollars.

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2st Quarter 2013 Highlights:

Revenue: Revenue totaled $528,196 for the second quarter of 2013, an increase of $57,876, or 12.3%, from the second quarter of 2012. During the second quarter of 2013, revenue from our Employee Benefits, Tech Support and Anti-virus channels, contributed $88,562 to the total increase in revenues and revenues from the iSekurity customers, which we purchased in May 2013, contributed $24,864 to the total increase in revenues. These increases were partially offset by a $55,550 decrease in revenues from our Consumer Marketing Channel.
Gross Profit: Gross profit increased by $169,281, or 99.2%, from $170,601 during the second quarter of 2012 to $339,882 during the second quarter of 2013. The gross margin rate for the second quarter of 2013 and 2012 was 64.3% and 36.3%, respectively. In the fourth quarter of 2012, we entered into a new data agreement which substantially decreased our cost of revenue beginning in January 2013.
General and Administrative Expense: General and administrative expense decreased by $62,415, or 14.6%, from the second quarter of 2012.
Balance Sheet: Cash and cash equivalents as of June 30, 2013 was $529,496.

ID Watchdog CEO, Michael Greene, commented, "We experienced solid revenue growth from our employee benefits and our tech support channels during the second quarter of 2013. We will continue to aggressively expand these distribution channels for the balance of 2013 and we anticipate that our efforts in during 2013 will drive accelerated revenue growth in 2014." Mr. Greene continued, "In May 2013, we closed on the purchase of approximately 1,800 customers from iSekurity, Inc., which will further add to our revenue growth."

ID Watchdog, Inc. Consolidated Interim Condensed Statements of Operations (Unaudited)

	Three months ended June 30,		Six months ended June 30,
	2013	2012	2013	2012

Revenue	$ 528,196	$ 470,320	$ 1,082,684	$ 914,377
Cost of revenue	188,314	299,719	336,567	585,729
Gross profit	339,882	170,601	746,117	328,648

Operating expense:
General and administrative expense	365,326	427,741	748,230	854,013
Sales and Marketing expense	115,794	121,102	243,172	213,179
Stock – based compensation expense	43,655	110,838	101,055	342,171
Depreciation and amortization expense	22,778	22,965	44,582	46,899
	547,553	682,646	1,137,039	1,456,262
Operating loss	(207,671)	(512,045)	(390,922)	(1,127,614)

Other income (expense):
Interest expense	(198,432)	(184,327)	(384,729)	(371,219)
Interest income	6	1,172	10	4,611
Gain (loss) on warrant liability	20,819	195,316	(99,829)	380,519
	(177,607)	12,161	(484,548)	13,911

Net loss and comprehensive loss applicable to ordinary shares	$ (385,278)	$ ( 499,884)	$ (875,470)	$ (1,113,703)
Basic and diluted net loss per share applicable to ordinary shares	$ (0.00)	$ ( 0.00)	$ (0.01)	$ (0.01)
Weighted average number of shares outstanding - basic and diluted	120,417,415	118,494,338	119,912,345	118,386,535

Consolidated Condensed Balance Sheets
		June 30, 2013		December 31, 2012
		(Unaudited)		(Unaudited)
ASSETS
Cash and cash equivalents		$	529,496	$	319,073
Accounts receivable			204,797		144,561
Prepaid expenses and other			94,934		73,466
	Total current assets		829,227		537,100
Customer agreements, net			32,534		—
Property and equipment, net			110,126		153,735
	Total Assets	$	971,887	$	690,835
LIABILITIES
Accounts payable, accrued liabilities and other		$	595,781	$	534,708
Deferred Revenue			543,580		267,056
	Total current liabilities		1,139,361		801,764
Deferred Rent			87,884		89,923
Finance lease obligations, net of current portion			38,060		44,875
Credit Facility			209,268		—
Series C Preferred mandatorily redeemable preferred shares, net of discount and conversion feature			3,249,658		2,892,031
Warrants liability			199,659		99,830
	Total Liabilities		4,923,890		3,928,423
	Total Shareholders' Deficit		(3,952,003)		(3,237,588)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT		$	971,887	$	690,835

Financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent quarterly reports and our annual report. These documents are available online at www.sedar.com and in the "Company Overview" section of our website at www.IDWatchdog.com.

About ID Watchdog, Inc.

ID Watchdog was founded in 2005 and is headquartered in Denver, Colorado. The Company provides three-tiered comprehensive monitoring, detection and resolution for identity theft. ID Watchdog proactively detects identity theft problems at their source and provides immediate resolution services to ensure complete peace of mind for individuals. All the Company's services have been developed with input from industry experts; national consumer advocacy groups; federal, state, and local law enforcement agencies; consumer protection agencies; and adhere to guidelines published by the Consumer Federation of America. For more information, please visit www.IDWatchdog.com.

Forward-Looking Statement

This news release includes certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 which address future events and conditions which are subject to various risks and uncertainties. The actual results could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the Company's control. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are disclosed in the company's filings with Canadian regulators at www.sedar.com. ID Watchdog assumes no obligation to update the forward-looking statements of management beliefs, opinions, projections, or other factors should they change.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Company Contact:
ID Watchdog, Inc.
Jay B. Lewis
Chief Financial Officer
303-339-8099
[email protected]
www.idwatchdog.com

SOURCE ID Watchdog, Inc.