DENVER, CO--April 22, 2013 -
-Employee Benefit Channel generated 4th quarter year over year customer growth of 28.2% driving overall 4th quarter customer growth of 19.5%
-New strategic channel focus drives full year 2012 customer growth of 22.1%
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 4th quarter ended December 31, 2012. All amounts are in U.S. dollars.
4th Quarter 2012 Highlights:
-Revenue: Revenue was $460,093 for the fourth quarter of 2012, a decrease of 3.7% from the fourth quarter of 2011. The average number of customer receiving our service during the quarter increased by 19.5% year over year with our employee benefits customers increasing by 28.2%. While our new customers from the employee benefit, tech support and anti-virus channels pay a lower net subscription rates compared to the rates we receive from our consumer marketing channel, these new customers are acquired at a much lower cost per customer and we believe they will also subscribe to our services for longer periods as compared to the consumer marketing channel customers.
-Gross Profit: Gross profit decreased slightly to $187,546 during the fourth quarter of 2012 as compared to $188,193 during the fourth quarter of 2011. The gross margin rate for the fourth quarter of 2012 and 2011 was 40.8% and 39.4%, respectively. In the fourth quarter, we entered into a new data agreement which will substantially decrease our cost of revenue beginning in January 2013 and increase our gross margin in 2013 to a range of 62% to 68% of revenue.
-Operating Expense: Operating expense decreased by $64,853, or 10.8%, from the fourth quarter of 2011.
-Balance Sheet: Cash and cash equivalents as of December 31, 2012 was $319,073.
Full Year 2012 Highlights:
-Revenue: Revenue for 2012 was $1,808,522, a decrease of 10.5% from the prior year. While the average number of customers during the year increased only slightly, we ended 2012 with 22.1% more customers as customer growth accelerated in the second half of 2012.
-Gross Profit: Gross profit was $688,663 for 2012 as compared to $1,079,267 for 2011. The gross margin rate for the year 2012 and 2011 was 38.1% and 53.4%, respectively, as our data costs increased significantly beginning in the second half of 2011.
-Operating Expense: Operating expense decreased by $817,924, or 23.7%, for 2012 as compared to the prior year as we adjusted our cost structure to better align with our new strategic direction.
ID Watchdog CEO, Michael Greene, commented, "We experienced strong customer growth from our employee benefits and our tech support/anti-virus channels during 2012 and we look to build on this growth in 2013 both organically and from our pending purchase of customers from iSekurity, Inc. which we expect to close in late April or early May 2013."
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|ID Watchdog, Inc. | | |
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|Consolidated Condensed Statements of Operations | | |
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|(Unaudited) | | |
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| | |Three months ended December 31, | | |Years ended December 31, | |
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| | |2012 | | |2011 | | |2012 | | |2011 | | |
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|Revenue | |$ |460,093 | | |$ |477,552 | | |$ |1,808,522 | | |$ |2,020,063 | | |
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|Cost of revenue | | |272,547 | | | |289,359 | | | |1,119,859 | | | |940,796 | | |
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|Gross profit | | |187,546 | | | |188,193 | | | |688,663 | | | |1,079,267 | | |
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|% to Revenue | | |40.8% | | | |39.4% | | | |38.1% | | | |53.4% | | |
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|Operating expense: | | | | | | | | | | | | | | | | | |
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| |General and administrative | | |294,222 | | | |267,048 | | | |1,425,323 | | | |1,904,184 | | |
| |expense | | | | | | | | | | | | | | | | | |
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| |Sales and Marketing expense | | |143,817 | | | |142,225 | | | |592,843 | | | |597,052 | | |
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| |Stock-based compensation | | |74,075 | | | |162,108 | | | |519,971 | | | |774,553 | | |
| |expense | | | | | | | | | | | | | | | | | |
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| |Depreciation and amortization| | |21,814 | | | |27,400 | | | |90,649 | | | |170,921 | | |
| |expense | | | | | | | | | | | | | | | | | |
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| | | |533,928 | | | |598,781 | | | |2,628,786 | | | |3,446,710 | | |
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|Operating loss | | |(346,382) | | | |(410,588) | | | |(1,940,123) | | | |(2,367,443) | | |
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|Other income (expense): | | | | | | | | | | | | | | | | | |
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| |Gain (loss) on warrant | | |140,614 | | | |1,086,625 | | | |524,772 | | | |450,625 | | |
| |liability | | | | | | | | | | | | | | | | | |
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| |Interest income | | |124 | | | |(466) | | | |5,135 | | | |3,061 | | |
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| |Interest expense | | |(184,667) | | | |(188,347) | | | |(740,788) | | | |(696,760) | | |
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| | | |(43,929) | | | |894,788 | | | |(210,881) | | | |(246,098) | | |
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|Net income (loss) and | |$ |(390,311) | | | |$ 484,200 | | | |$ (2,151,004) | | |$ | (2,613,541) | | |
|comprehensive income | | | | | | | | | | | | | | | | | |
|(loss) applicable to | | | | | | | | | | | | | | | | | |
|ordinary shares | | | | | | | | | | | | | | | | | |
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|Basic and diluted net| |$ | | | | |$ | | | |$ | | | |$ |) | |
|income (loss) per | | | 0.00 | | | | 0.00 | | | | (0.02) | | | | (0.03) | | |
|share applicable to | | | | | | | | | | | | | | | | | |
|ordinary shares: | | | | | | | | | | | | | | | | | |
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|Weighted average | | |118,834,997 | | | |101,348,330 | | | |118,611,992 | | | | 97,977,264 | |
|number of shares | | | | | | | | | | | | | | | | |
|outstanding-basic and| | | | | | | | | | | | | | | | |
|diluted | | | | | | | | | | | | | | | | |
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|Consolidated Condensed Balance Sheets | | |
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| | |December 31, 2012 | | |December 31, 2011 | | |
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| | |(Unaudited) | | |(Unaudited) | | |
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|ASSETS | | | | | | | | | |
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|Cash, cash equivalents and available-for-sale securities | |$ |319,073 | | |$ |1,589,688 | | |
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|Accounts receivable | | |144,561 | | | |109,591 | | |
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|Prepaid expenses and other | | |73,466 | | | |52,901 | | |
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| |Total current assets | | |537,100 | | | |1,752,180 | | |
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|Property and equipment | | |153,735 | | | |238,658 | |
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| | |Total Assets | |$ |690,835 | | |$ |1,990,838 | | |
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|LIABILITIES | | | | | | | | |
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|Accounts payable, accrued liabilities and other | |$ |534,708 | | |$ |480,639 | |
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|Deferred Revenue | | |267,056 | | | |215,200 | |
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| |Total current liabilities | | |801,764 | | | |695,839 | | |
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|Deferred Rent | | |89,923 | | | |91,919 | |
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|Finance lease obligations, net of current portion | | |44,875 | | | |58,449 | |
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|Series C Preferred mandatorily redeemable preferred shares, net | | |2,892,031 | | | |2,204,390 | |
|of discount and conversion feature | | | | | | | | |
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|Warrants | | |99,830 | | | |624,602 | |
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| | |Total Liabilities | | |3,928,423 | | | |3,675,199 | | |
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| | |Total Shareholders' Deficit | | |(3,237,588 |) | | |(1,684,361 |) | |
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|TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | |$ |690,835 | | |$ |1,990,838 | |
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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 annual report. This document is 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
