Mr. Jay Lewis reports
ID WATCHDOG ANNOUNCES 4TH QUARTER AND FULL-YEAR 2013 RESULTS
ID Watchdog Inc. has released its results for the fourth quarter ended Dec. 31, 2013. (All amounts are in U.S. dollars.)
Fourth quarter 2013 highlights:
- Revenue: Revenue totalled $678,911 for the fourth quarter of 2013, an increase of $218,818, or 47.6 per cent, from the fourth quarter of 2012. During the fourth quarter of 2013, revenue from the employee benefit and tech support channels increased by 51.7 per cent and contributed $153,879 to the total increase in revenues, while revenues from the ISekurity customers and the anti-virus customers contributed $82,391 and $31,147, respectively, to the total increase in revenues. These increases were partially offset by a $48,603 decrease in revenues from the legacy consumer marketing channel.
- Gross profit: Gross profit increased by $326,864, or 174.3 per cent, from $187,546 during the fourth quarter of 2012 to $514,410 during the fourth quarter of 2013. The gross margin rates for the fourth quarter of 2013 and 2012 were 75.8 per cent and 40.8 per cent, respectively. In the fourth quarter of 2012, the company entered into a new data agreement, which substantially decreased its cost of revenue beginning in January, 2013.
- Earnings before interest, taxes, depreciation and amortization: For the fourth quarter of 2013, earnings before interest, taxes, depreciation and amortization improved by $265,843 to $15,350 as compared with ($250,493) for the similar period in 2012. The improvement in earnings before interest, taxes, depreciation and amortization is due primarily to a $326,864 improvement in gross margin as described herein.
- Cash balances: Cash and cash equivalents as of Dec. 31, 2013, totalled $552,694.
Full-year 2013 highlights:
- Revenue: Revenue increased $549,753, or 30.4 per cent, from $1,808,522 for the year ended Dec. 31, 2012, to $2,358,275 for the year ended Dec. 31, 2013. Revenue from the employee benefits and tech support channels increased by 39.4 per cent and contributed $417,576 to the total increase in revenues, while revenues of the ISekurity customers and the anti-virus customers contributed $276,396 and $100,173, respectively, to the total increase in revenues. These increases were partially offset by a $244,395 decrease in revenues from the consumer marketing channel.
- Gross profit: Gross profit increased by $985,302, or 143.1 per cent, from $688,663 in 2012 to $1,673,965 in 2013. The gross margin rates for 2013 and 2012 were 71.0 per cent and 38.1 per cent, respectively.
- Earnings before interest, taxes, depreciation and amortization: For 2013, earnings before interest, taxes, depreciation and amortization improved by $1,015,814 to ($313,689) as compared with ($1,329,503) in 2012. The improvement in earnings before interest, taxes, depreciation and amortization is due primarily to a $985,302 improvement in gross margin as described herein.
ID Watchdog chief executive officer Michael Greene stated: "We ended 2013 on a very strong note, both financially and operationally, as we continue to expand our customer base through our employee benefits and our tech support channels, which are our core focus for future growth. Gross margin improved substantially from the prior year, and we continue to work to enhance our portfolio of identity theft protection services, while at the same time working to maintain our gross profit margin. Our success in building our employee benefits and our tech support channels position us well for accelerating growth in 2014 and beyond. We achieved a number of significant milestones in 2013, including generating positive EBITDA in the fourth quarter of the year, which is a first for the company."
Jay Lewis, ID Watchdog's chief financial officer, commented, "We enter 2014 with strong momentum, and, as we look at the quarter ended March 31, 2014, we expect core distribution revenue growth and total revenue growth of approximately 65 per cent and 40 per cent, respectively, with increasing EBITDA for the quarter and with our cash balances growing significantly to nearly $800,000, an increase of approximately $250,000 over the year-end 2013 balances."
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in U.S. dollars)
Three months ended Dec. 31, Years ended Dec. 31,
2013 2012 2013 2012
Revenue $ 678,911 $ 460,093 $ 2,358,275 $ 1,808,522
Cost of revenue 164,501 272,547 684,310 1,119,859
Gross profit 514,410 187,546 1,673,965 688,663
Operating expense
General and administrative expense 325,791 301,657 1,407,228 1,478,623
Sales and marketing expense 173,269 136,382 580,426 539,543
Stock-based compensation expense 246,315 74,075 376,536 519,971
Depreciation and amortization expense 17,182 21,814 85,243 90,649
Total operating expense 762,557 533,928 2,449,433 2,628,786
Operating (loss) (248,147) (346,382) (775,468) (1,940,123)
EBITDA 15,356 (250,493) (313,689) (1,329,503)
Other income (expense)
Gain (loss) on warrant liability (618,942) 140,614 (698,805) 524,772
Interest income 160 124 257 5,135
Interest expense (211,811) (184,667) (800,337) (740,788)
Total other income (expense) (830,593) (43,929) (1,498,885) (210,881)
Net (loss) and comprehensive (loss) applicable
to ordinary shares $ (1,078,740) $ (390,311) $ (2,274,353) $ (2,151,004)
Basic and diluted net (loss) per share
applicable to ordinary shares $ (0.01) $ (0.00) $ (0.02) $ (0.02)
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