DENVER, Aug. 4, 2016 /PRNewswire/ --
-- Employee Benefit revenues increased 144.3% -- Total revenues increased 96.9% -- Gross profit increased 100.7%
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, 2016. All amounts are in U.S. dollars.
2nd Quarter 2016 Highlights:
-- Revenue: Revenue totaled $2,552,390 for the second quarter of 2016, an increase of $1,256,125, or 96.9%, from the second quarter of 2015. Revenue from our Employee Benefit Channel increased $1,323,855, or 144.3%, from $917,519 for the three months ended June 30, 2015 to $2,241,374 for the three months ended June 30, 2016. -- Gross Profit: Gross profit increased by $973,717, or 100.7%, from $966,980 during the second quarter of 2015 to $1,940,697 during the second quarter of 2016. The gross margin rates for the second quarter of 2016 and 2015 were 76.0% and 74.6%, respectively. -- Operating Income: For the second quarter of 2016, operating income improved by $53,740 to $190,859 as compared with $137,119 for the similar period in 2015. -- Adjusted EBITDA: For the second quarter of 2016, adjusted EBITDA improved by $317,088 to $476,229 as compared with $159,141 for the similar period in 2015. -- Cash Balances: Cash and cash equivalents as of June 30, 2016, totaled $2,246,527, an increase of $1,177,238 from our cash balances at December 31, 2015.
Third Quarter 2016 Updated Guidance
Three Months Ended September 30, Three Months Ending September 2015 --Actual 30, 2016 -- Change Guidance vs. 2015 ---- Employee Benefit Revenue $1,001,814 $2,225,000 to $2,275,000 122% to 127% Total Revenue $1,377,583 $2,475,000 to $2,525,000 80% to 83% Gross Margin $1,000,287 $1,800,000 to $1,850,000 80% to 85% Operating Income (1) $186,047 $140,000 to $190,000 (25%) to 2% Adjusted EBITDA $211,150 $300,000 to $350,000 42% to 66%
(1) The potential decrease in operating income projected in the third quarter of 2016 is due to a projected $131,000 increase stock-based compensation expense.
ID Watchdog CEO, Michael Greene, stated, "We are pleased to report solid operating and financial performance in the second quarter of 2016, resulting in record second quarter revenue and Adjusted EBITDA of $2,552,390 and $476,229, respectively. We continue to experience exceptionally strong growth in our Employee Benefit Channel where revenue grew by over 144% driven by our robust January 1, 2016 employee enrollments."
Mr. Greene continued, "As we look forward to the third quarter of 2016, we anticipate we will increase our Employee Benefit Channel revenue by 122%-127% over the prior year quarter, deliver gross margin around 72.5% and an Adjusted EBITDA margin of approximately 13%. We remain highly confident we will exceed our goal of $10 million in revenue for calendar 2016."
ID Watchdog, Inc. Consolidated Statements of Operations Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2016 2015 2016 2015 ---- ---- ---- ---- Revenue $2,552,390 $1,296,265 $5,125,065 $2,565,951 Cost of revenue 611,693 329,285 1,296,028 676,934 ------- ------- Gross profit 1,940,697 966,980 3,829,037 1,889,017 Operating expense: General and administrative expense 512,222 377,673 1,108,621 708,899 Benefit broker commission expense 586,910 220,954 1,189,898 436,858 Sales and marketing expense 365,336 209,212 722,486 421,831 Share-based compensation expense 268,729 11,066 295,998 25,359 Depreciation and amortization expense 16,641 10,956 31,808 21,168 ------ ------ ------ ------ 1,749,838 829,861 3,348,811 1,614,115 --------- ------- --------- --------- Operating income 190,859 137,119 480,226 274,902 Other income (expense): Interest expense, net (103,529) (300,368) (266,554) (532,874) Litigation provision (142,414) - (182,222) - Gain on warrant liability - - 317,709 199,659 (245,943) (300,368) (131,067) (333,215) -------- -------- -------- -------- Net income (loss) and comprehensive income (loss) applicable to ordinary shares $(55,084) $(163,249) $349,159 $(58,313) ======== ========= ======== ======== Basic net income (loss) per share applicable to ordinary shares $(0.00) $(0.00) $0.00 $(0.00) ====== ====== ===== ====== Weighted average number of shares outstanding - basic 139,984,597 121,834,997 134,904,526 121,834,997 =========== =========== =========== =========== $(0.00) $(0.00) $0.00 $(0.00) Diluted net income (loss) per share applicable to ordinary shares 139,984,597 121,834,997 137,853,200 121,834,997 Weighted average number of shares outstanding - diluted
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2016 2015 2016 2015 ---- ---- ---- Net income (loss) $(55,084) $(163,249) $349,159 $(58,313) Depreciation and amortization expense 16,641 10,956 31,808 21,168 Interest expense, net 103,529 300,368 266,554 532,874 ------- ------- ------- ------- EBITDA 65,086 148,075 647,521 495,729 Gain on warrant liability - - (317,709) (199,659) Share-based compensation expense 268,729 11,066 295,998 25,359 Litigation provision 142,414 - 182,222 - Adjusted EBITDA $476,229 $159,141 $808,032 $321,429 ======== ======== ======== ========
ID Watchdog, Inc Consolidated Statements of Financial Position June 30, December 31, 2016 2015 ---- ---- ASSETS Cash and cash equivalents $2,246,527 $1,069,289 Trade receivable, net 542,391 311,136 Prepaid expenses and other 186,970 170,434 ------- ------- Total current assets 2,975,888 1,550,859 Property and equipment, net 183,107 155,995 Customer agreements, net 12,430 15,781 ------ ------ Total Assets $3,171,425 $1,722,635 ========== ========== LIABILITIES Accounts payable, accrued liabilities and other $1,860,840 $1,173,852 Deferred revenue 340,958 473,481 Provision 365,000 350,000 Total current liabilities 2,566,798 1,997,333 Promissory Notes 2,751,956 - Deferred rent 21,133 26,860 Finance lease obligations, net of current portion 15,696 17,641 Series C Preferred mandatorily redeemable preferred shares, net of discount and conversion feature - 5,042,709 Warrant liability - 317,709 --- ------- Total Liabilities 5,355,583 7,402,252 --------- --------- Total Shareholders' Deficit (2,184,158) (5,679,617) ---------- ---------- Total Liabilities and Shareholders' Deficit $3,171,425 $1,722,635 ========== ==========
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 taxes, depreciation and amortization, share-based compensation, litigation provision, 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 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 press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements"). All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. Such forward-looking statements include, but are not limited to, statements about: future revenue and the growth of revenue including growth from our Employee Benefit Channel; anticipated expenditures; our business strategies; our ability to grow in both the near and long term and the funding of our growth opportunities; the plans, objectives, expectations and intentions of the company regarding revenue growth; the Company's financial position including liquidity and financial capacity, and the future development of the company's business.
The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. We identify the principal risks and uncertainties that affect our performance Company's filings with Canadian regulators at www.sedar.com. Furthermore, the forward-looking statements and financial outlook contained in this release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements and financial outlook, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
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
InvestorRelations@idwatchdog.com
www.idwatchdog.com
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SOURCE ID Watchdog, Inc.