ID Watchdog Announces Results for Second Quarter 2015

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Aug 17, 2015, 02:45 ET

DENVER, Aug. 17, 2015 /PRNewswire/ --

Employee Benefit revenues increased 144.7%
Total revenues increased 53.9%
Gross profit increased 64.2%

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, 2015. All amounts are in U.S. dollars.

2nd Quarter 2015 Highlights:

Revenue: Revenue totaled $1,296,265 for the second quarter of 2015, an increase of $453,945, or 53.9%, from the second quarter of 2014. Revenue from our Employee Benefit Channel increased $542,525, or 144.7%, from $374,994 for the three months ended June 30, 2014 to $917,519 for the three months ended June 30, 2015.
Gross Profit: Gross profit increased by $378,222, or 64.2%, from $588,758 during the second quarter of 2014 to $966,980 during the second quarter of 2015. The gross margin rates for the second quarter of 2015 and 2014 were 74.6% and 69.9%, respectively.
Adjusted EBITDA: For the second quarter of 2015, adjusted EBITDA improved by $44,054 to $159,141 as compared with $115,087 for the similar period in 2014.
Cash Balances: Cash and cash equivalents as of June 30, 2015, totaled $849,742, a decrease of $36,734 from our cash balances at December 31, 2014.

ID Watchdog CEO, Michael Greene, stated, "We are pleased to report strong top line growth for the second quarter in our Employee Benefit channel as well as for total revenue. We continue to achieve great success in building out our network of employee benefit brokers. Our pipeline of total employees who may open enroll for our services in the first quarter of 2016 is significantly stronger than it was last year at this time and it continues to build as the year progresses, which is creating a solid foundation for strong revenue growth in 2016."

Mr. Jay Lewis, ID Watchdog's CFO, commented, "As we look forward to the second half of 2015, we anticipate that Employee Benefit revenue growth will range between 120%-125% for both the third and fourth quarters of 2015 over the similar quarters in 2014, and that total revenue growth will range between 48%-52% and 40%-44% for the third and fourth quarters of 2015, over the similar quarters in 2014, respectively."

ID Watchdog, Inc. Unaudited Consolidated Condensed Statements of Operations

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Revenue	$ 1,296,265	$ 842,320	$ 2,565,951	$ 1,632,947
Cost of revenue	329,285	253,562	676,934	502,392
Gross profit	966,980	588,758	1,889,017	1,130,555
Operating expense:
General and administrative expense	377,673	300,236	708,899	641,093
Sales and marketing expense	430,166	173,435	858,689	315,632
Share-based compensation expense	11,066	35,159	25,359	94,938
Depreciation and amortization expense	10,956	15,136	21,168	33,366
	829,861	523,966	1,614,115	1,085,029
Operating income	137,119	64,792	274,902	45,526
Other income (expense):
Gain (loss) on warrant liability	—	(159,727)	199,659	39,931
Interest expense, net	(300,368)	(213,278)	(532,874)	(429,734)
	(300,368)	(373,005)	(333,215)	(389,803)
Net loss and comprehensive loss applicable to ordinary shares	$ (163,249)	$ (308,213)	$ (58,313)	$ (344,277)
Basic and diluted net loss per share applicable to ordinary shares	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Weighted average number of shares outstanding - basic and diluted	121,834,997	121,834,997	121,834,997	121,834,997

Reconciliation of Net Loss to Adjusted EBITDA

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Net loss	$ (163,249)	$ (308,213)	$ (58,313)	$ (344,277)
Depreciation and amortization expense	10,956	15,136	21,168	33,366
Interest expense, net	300,368	213,278	532,874	429,734
EBITDA	148,075	(79,799)	495,729	118,823
Loss (gain) on warrant liability	—	159,727	(199,659)	(39,931)
Share-based compensation expense	11,066	35,159	25,359	94,938
Adjusted EBITDA	$ 159,141	$ 115,087	$ 321,429	$ 173,830

ID Watchdog, Inc. Unaudited Consolidated Statements of Financial Position

			June 30, 2015		December 31, 2014
ASSETS
Cash and cash equivalents			$	849,742	$	886,476
Accounts receivable, net				264,639		168,602
Prepaid expenses and other				105,330		123,617
	Total current assets			1,219,711		1,178,695
Property and equipment, net				80,081		79,879
Customer agreements, net				19,131		22,482
		Total Assets	$	1,318,923	$	1,281,056

LIABILITIES
Accounts payable, accrued liabilities and other			$	1,040,417	$	977,657
Current portion of credit facility				—		84,422
Deferred revenue				460,045		439,794
	Total current liabilities			1,500,462		1,501,873
Credit facility, net				—		99,500
Deferred rent				31,600		28,440
Finance lease obligations, net of current portion				6,136		14,876
Series C Preferred mandatorily redeemable preferred shares, net of discount and conversion feature				4,639,067		4,334,395
Warrants liability				199,659		399,318
		Total Liabilities		6,376,924		6,378,402
		Total Shareholders' Deficit		(5,058,001)		(5,097,346)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT			$	1,318,923	$	1,281,056

About Non-IFRS Financial Measure

To supplement the Company's consolidated financial results presented in accordance with International Financial Reporting Standards ("IFRS"), the Company reports "Adjusted EBITDA" (net income (loss) before deducting net interest expense, income tax expense, depreciation and amortization, share-based compensation, and gain (loss) on warrant liability) and uses this metric to measure the performance of our business. Adjusted EBITDA is not a performance measure defined under IFRS and is not considered an alternative to income from operations or net earnings (loss) in the context of measuring the Company's performance. Adjusted EBITDA does not have a standardized meaning and is therefore not likely to be comparable with similar measures used by other publicly traded companies. Adjusted EBITDA should not be used as an exclusive measure of cash flow since it does not account for the impact of working capital changes, income taxes, interest payments, capital expenditures, debt principal reductions and other sources and uses of cash, and is not meant to be considered in isolation or as a substitute for financial information prepared in accordance with IFRS.

Financial information contained in this press release should be read in conjunction with the unaudited consolidated interim condensed 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:
Jay B. Lewis
Chief Financial Officer
ID Watchdog, Inc.
303-339-8099
[email protected]
www.idwatchdog.com

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SOURCE ID Watchdog, Inc.