ID Watchdog Announces 1st Quarter 2014 Results

DENVER, May 21, 2014 /CNW/ -

  • Revenues from core distribution channels increased 69.6%
  • Total revenues increased 42.6%
  • Positive EBITDA of $58,743

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 1st quarter ended March 31, 2014. All amounts are in U.S. dollars.

1st Quarter 2014 Highlights:

  • Revenue: Revenue totaled $790,627 for the first quarter of 2014, an increase of $236,139, or 42.6%, from the first quarter of 2013. During the first quarter of 2014, revenue from our employee benefit and tech support channels, increased by 69.6% and contributed $229,733 to the total increase in revenues, while revenues from our anti-virus customers and the iSekurity customers contributed $24,971 and $21,123, respectively, to the total increase in revenues. These increases were partially offset by a $39,688 decrease in revenues from our legacy consumer marketing channel.
  • Gross Profit: Gross profit increased by $180,255, or 49.9%, from $361,542 during the first quarter of 2013 to $541,797 during the first quarter of 2014. The gross margin rates for the first quarter of 2014 and 2013 were 68.5% and 65.2%, respectively.
  • EBITDA: For the first quarter of 2014, EBITDA improved by $162,790 to $58,743 as compared with $(104,047) for the similar period in 2013. The improvement in EBITDA is due primarily to an $180,255 improvement in gross margin as described above.
  • Cash Balances: Cash and cash equivalents as of March 31, 2014, totaled $793,866, an increase of $241,172 from our cash balances at December 31, 2013.

ID Watchdog CEO, Michael Greene, stated, "Revenue growth in our Employee Benefit and Tech Support Channels, our core distribution channels, accelerated further in the first quarter of 2014 to 69.6% from 51.7% in the fourth quarter of 2013. Revenue growth from our Employee Benefits Channel will generally be strongest in the first quarter of the calendar year as over 50% of the employers we target open enroll their employees in new benefit plans during the first calendar quarter."

Mr. Jay Lewis, ID Watchdog's CFO, commented, "As we look forward to the quarter ending June 30, 2014, we expect core distribution revenue growth and total revenue growth of approximately 90% and 60%, respectively, with continued EBITDA growth. Looking out to the second half of the year we anticipate that our quarterly growth in total revenue to be in the low 40% area due to the seasonal factors Mr. Greene noted above."

ID Watchdog, Inc.

Consolidated Condensed Statements of Operations



Three Months Ended March 31,



2014


2013






Revenue


$ 790,627


$ 554,488

Cost of revenue


248,830


192,946






Gross profit


541,797


361,542






Operating expense:





General and administrative expense


340,857


338,211

Sales and marketing expense


142,197


127,378

Stock – based compensation expense


59,779


57,400

Depreciation and amortization expense


18,230


21,804



561,063


544,793

Operating loss


(19,266)


(183,251)






EBITDA


58,743


(104,047)






Other income (expense):





Gain (loss) on warrant liability


199,658


(120,648)

Interest income


9


4

Interest expense


(216,465)


(186,297)



(16,798)


(306,941)






Net loss and comprehensive loss applicable to ordinary shares


$ (36,064)


$ (490,192)






Basic and diluted net loss per share applicable to ordinary shares


$ (0.00)


$ (0.00)






Weighted average number of shares outstanding - basic and diluted


121,834,997


119,401,664

ID Watchdog, Inc.

Consolidated Condensed Balance Sheets






March 31,
2014



December 31,
2013











ASSETS










Cash and cash equivalents


$

793,866



$

552,694



Accounts receivable



221,037




173,042



Prepaid expenses and other



71,160




97,177




Total current assets



1,086,063




822,913



Property and equipment, net



69,037




80,168



Customer agreements, net



27,508




29,184





Total Assets


$

1,182,608



$

932,265















LIABILITIES










Accounts payable, accrued liabilities and other


$

622,026



$

486,357



Current portion of credit facility



130,887




119,986



Deferred revenue



695,870




568,224




Total current liabilities



1,448,783




1,174,567



Credit facility, net



262,237




283,923



Deferred rent



83,783




86,524



Finance lease obligations, net of current portion



27,008




30,807



Series C Preferred mandatorily redeemable preferred shares, net of discount and conversion feature



3,793,510




3,613,214



Warrants liability



598,977




798,635





Total Liabilities



6,214,298




5,987,670





Total Shareholders' Deficit



(5,031,690)




(5,055,405)



TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT


$

1,182,608



$

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 EBITDA (operating income before depreciation and amortization and stock-based compensation) and uses this metric to measure the performance of our business. 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. EBITDA does not have a standardized meaning and is therefore not likely to be comparable with similar measures used by other publically traded companies. EBITDA should not be used as an exclusive measure of cash flow since it does not account for the impact of working capital changes, 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:
ID Watchdog, Inc.
Jay B. Lewis
Chief Financial Officer
303-339-8099
InvestorRelations@idwatchdog.com
www.idwatchdog.com

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SOURCE ID Watchdog, Inc.

For further information:

http://www.idwatchdog.com