ID Watchdog Announces Results for the Third Quarter of 2014

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Nov 04, 2014, 05:02 ET

DENVER, Nov. 4, 2014 /PRNewswire/ --

Revenues from Core Distribution Channels increased 81.3%
Total revenues increased 48.8%
Gross profit increased 84.6%
Positive adjusted EBITDA of $103,319

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 3rd quarter ended September 30, 2014. All amounts are in U.S. dollars.

3rd Quarter 2014 Highlights:

Revenue: Revenue totaled $887,685 for the third quarter of 2014, an increase of $291,005, or 48.8%, from the third quarter of 2013. During the third quarter of 2014, revenue from our employee benefits and tech support channels ("Core Distribution Channels") increased by 81.3% and contributed $295,694 to the total increase in revenues, while revenues from our anti-virus customers contributed $26,664 to the total increase in revenues. These increases were partially offset by decreases of $25,981 and $5,372 in revenue from our consumer marketing channel and iSekurity customers, respectively.
Gross Profit: Gross profit increased by $300,498, or 84.6%, from $355,249 during the third quarter of 2013 to $655,747 during the third quarter of 2014. The gross margin rates for the third quarter of 2014 and 2013 were 73.9% and 59.5%, respectively.
Adjusted EBITDA: For the third quarter of 2014, adjusted EBITDA improved by $187,073 to $103,319 as compared with $(83,754) for the similar period in 2013.
Cash Balances: Cash and cash equivalents as of September 30, 2014, totaled $819,518, an increase of $266,824 from our cash balances at December 31, 2013.

ID Watchdog CEO, Michael Greene, stated, "We are pleased to report revenue growth from our Core Distribution Channels of 81.3% for the third quarter of 2014. During the quarter we continued to expand our network of benefit broker and private benefit exchanges and we are already seeing terrific new customer additions through these relationships. We recently received commitments from a significant number of new customers, the largest of which employs approximately 63,000 employees, who will begin offering our identity theft protection services to their employees beginning in January 2015, enhancing our position as a leading service provider to Fortune rated customers. Mr. Greene continued, "We estimate that Core Distribution Channel revenue and total revenue will increase in the ranges of 45% to 50% and 25% to 30%, respectively, in the 4^th quarter of 2014 over 2013 levels. Further, we anticipate that our revenue growth will accelerated in the first quarter of 2015 from these levels, as we roll-out our identity theft protection services to the new customers noted above."

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Revenue	$ 887,685	$ 596,680	$ 2,520,632	$ 1,679,364
Cost of revenue	231,938	241,431	734,330	681,399
Gross profit	655,747	355,249	1,786,302	997,965
Operating expense:
General and administrative expense	356,122	275,018	997,215	919,847
Sales and marketing expense	196,306	163,985	511,938	407,157
Stock-based compensation expense	24,029	29,166	118,967	130,221
Depreciation and amortization expense	14,597	23,479	47,963	68,061
	591,054	491,648	1,676,083	1,525,286
Operating income (loss)	64,693	(136,399)	110,219	(527,321)
Other income (expense):
Gain (loss) on warrant liability	(79,863)	19,966	(39,932)	(79,863)
Interest expense, net	(210,021)	(203,710)	(639,755)	(588,429)
	(289,884)	(183,744)	(679,687)	(668,292)
Net income (loss) and comprehensive income (loss) applicable to ordinary shares	$ (225,191)	$ (320,143)	$ (569,468)	$ (1,195,613)
Basic and diluted net income (loss) per share applicable to ordinary shares	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.01)
Weighted average number of shares outstanding - basic and diluted	121,834,997	121,498,040	121,834,997	120,446,719

Reconciliation of Net Loss to Adjusted EBITDA

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Net loss	$ (225,191)	$ (320,143)	$ (569,468)	$ (1,195,613)
Depreciation and amortization expenses	14,597	23,479	47,963	68,061
Interest expense, net	210,021	203,710	639,755	588,429
EBITDA	(573)	(92,954)	118,250	(539,123)
Loss (gain) on warrant liability	79,863	(19,966)	39,932	79,863
Stock-based compensation expense	24,029	29,166	118,967	130,221
Adjusted EBITDA	$ 103,319	$ (83,754)	$ 277,149	$ (329,039)

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

			September 30, 2014		December 31, 2013
ASSETS
Cash and cash equivalents			$	819,518	$	552,694
Accounts receivable, net				291,548		173,042
Prepaid expenses and other				73,503		97,177
	Total current assets			1,184,569		822,913
Property and equipment, net				63,452		80,168
Customer agreements, net				24,157		29,184
		Total Assets	$	1,272,178	$	932,265

LIABILITIES
Accounts payable, accrued liabilities and other			$	719,666	$	486,357
Current portion of credit facility				159,980		119,986
Deferred revenue				647,479		568,224
	Total current liabilities			1,527,125		1,174,567
Credit facility, net				158,750		283,923
Deferred rent				80,493		86,524
Finance lease obligations, net of current portion				19,047		30,807
Series C Preferred mandatorily redeemable preferred shares, net of discount and conversion feature				4,154,102		3,613,214
Warrants liability				838,567		798,635
		Total Liabilities		6,778,084		5,987,670
		Total Shareholders' Deficit		(5,505,906)		(5,055,405)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT			$	1,272,178	$	932,265

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 loss before deducting net interest expense, income tax expense, depreciation and amortization, stock-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 (loss) 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 publically 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 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:
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.