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ID Watchdog Announces Third Quarter 2012 Results

Nov 30 2012 12:00AM

Marketwire

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DENVER, CO -- (Marketwire) -- 11/30/12 -- ID Watchdog, Inc. (TSX VENTURE: IDW) (PINKSHEETS: IDWAF)

Focus on employee benefits channel added year over year customer growth of 33.4% driving overall customer growth of 10.9%New data agreement will lift gross margins to over 65% beginning January 2013

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 third quarter ended September 30, 2012. All amounts are in U.S. dollars.

Third Quarter 2012 Highlights:

Revenue: Revenue was $434,052 for the third quarter of 2012, a decrease of 2.9% from the third quarter of 2011. Our total average customer base increased by 10.9% year over year with our employee benefits customers increasing by 33.4% •Gross Profit: Gross profit was $172,469 for the third quarter of 2012 as compared to $144,699 for the third quarter of 2011. The gross margin rate for the third quarter of 2012 and 2011 was 39.7% and 32.4%, respectively. Subsequent to the end of the third quarter, we entered into a new data agreement which will substantially decrease our cost of revenue beginning in January 2013. Had this agreement been in place at the beginning of the respective quarters, our gross profit for the third quarter of 2012 and 2011 would have been $292,469 and $264,699, respectively, with a gross profit margin of 67.4% for the third quarter of 2012. •Operating Expense: General and administrative expense decreased by $138,482, or 33.3%, from the third quarter of 2011. G&A expense was 63.8% and 93.0% of revenue for the third quarter of 2012 and 2011, respectively. •Balance Sheet: Cash and cash equivalents at the end of the third quarter were $685,781.

ID Watchdog CEO, Michael Greene, commented, "We saw strong customer growth from both our employee benefits and our anti-virus/tech support channels during the quarter and we continue to make great progress in building our employee benefits broker network to drive long-term growth. We did experience a slight contraction in revenue during the third quarter as most of our new customers pay lower net subscription rates as compared to our existing customer base. However, our expectation is that we will experience much higher retention rates and lower unit sales and marketing costs to attract these new customers." Mr. Greene added, "Through a combination of revenue growth, a substantial improvement in our gross margin beginning in January 2013 and further reductions in our operating costs, we look forward to generating positive operating income beginning in the second quarter of 2013."


ID Watchdog, Inc. Consolidated Condensed Statements of Operations (Unaudited) Three months ended Nine months ended September 30, September 30, -------------------------- -------------------------- 2012 2011 2012 2011 ------------ ------------ ------------ -----------Revenue $ 434,052 $ 446,817 $ 1,348,429 $ 1,542,511Cost of revenue 261,583 302,118 847,312 651,437 ------------ ------------ ------------ -----------Gross profit 172,469 144,699 501,117 891,074% to Revenue 39.7% 32.4% 37.2% 57.8%Operating expense: General and administrative expense 277,087 415,569 1,131,101 1,637,136 Sales and Marketing expense 235,847 195,148 449,026 454,827 Stock-based compensation expense 103,725 242,647 445,896 612,445 Depreciation and amortization expense 21,937 68,381 68,835 143,521 ------------ ------------ ------------ ----------- 638,596 921,745 2,094,858 2,847,929Operating loss (466,127) (777,046) (1,593,741) (1,956,855)Other income (expense): Gain (loss) on warrant liability 3,639 1,668,000 384,158 (636,000) Interest income 400 1,133 5,011 3,527 Interest expense (184,902) (182,913) (556,121) (508,413) ------------ ------------ ------------ ----------- (180,863) 1,486,220 (166,952) (1,140,886) Net income (loss) and comprehensive income (loss) applicable to ordinary shares $ (646,990) $ 709,174 $ (1,760,693) $(3,097,741) Net income (loss) per share applicable to ordinary shares: Basic $ (0.01) $ 0.01 $ (0.01) $ (0.03) ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Diluted $ (0.01) $ 0.00 $ (0.01) $ (0.03) ------------ ------------ ------------ ----------- Weighted average number of shares outstanding: Basic 118,834,997 101,348,330 118,537,114 93,605,574 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Diluted 118,834,997 156,188,427 118,537,114 93,605,574 ------------ ------------ ------------ -----------Consolidated Condensed Balance Sheets September 30, December 31, 2012 2011 -------------- ------------ (Unaudited) (Unaudited)ASSETSCash, cash equivalents and available-for-sale securities $ 685,781 $ 1,589,688Accounts receivable 90,320 109,591Prepaid expenses and other 39,973 52,901 -------------- ------------ Total current assets 816,074 1,752,180Property and equipment 175,549 238,658 -------------- ------------ Total Assets $ 991,623 $ 1,990,838 ============== ============LIABILITIESAccounts payable, accrued liabilities and other $ 541,329 $ 480,639Deferred Revenue 282,087 215,200 -------------- ------------ Total current liabilities 823,416 695,839Deferred Rent 90,734 91,919Finance lease obligations, net of current portion 48,127 58,449Series C Preferred mandatorily redeemable preferred shares, net of discount and conversion feature 2,710,254 2,204,390Warrants 240,444 624,602 -------------- ------------ Total Liabilities 3,912,975 3,675,199 -------------- ------------ Total Shareholders' Deficit (2,921,352) (1,684,361) -------------- ------------TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 991,623 $ 1,990,838 ============== ============




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 patent-pending, 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





Source: Marketwire


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