Epic Data International Inc.
TSX VENTURE : EKD

Epic Data International Inc.

August 26, 2010 18:01 ET

Epic Data Announces Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 26, 2010) - Epic Data International Inc. (TSX VENTURE:EKD) (the "Company" or "Epic Data"), a provider of manufacturing operations management and real-time data collection solutions, today announced the results of operations for the three and nine months ended June 30, 2010.

Results of Operations  
   
All amounts in thousands of dollars, except Three months   Nine months  
per share figures ended June 30,   ended June 30,  
  2010   2009   2010   2009  
   
Revenue $ 1,060   $ 1,391   $ 3,611   $ 4,819  
   
Cost of sales   540     696     1,770     2,397  
   
Gross Margin   520     695     1,841     2,422  
   
Expenses (income)                        
  Sales and marketing   325     317     810     1,083  
  General and administration   379     516     1,202     1,206  
  Product development   115     127     383     324  
  Amortization of property, plant and equipment   11     24     48     76  
  Net finance charges   11     17     41     60  
  Stock based compensation   23     6     34     18  
  Foreign exchange loss (gain)   (18 )   70     54     (24 )
  Severance costs   (9 )   3     37     69  
  Interest accretion   -     7     -     22  
  Refundable tax recovery, net of costs   -     (505 )   -     (505 )
   
    837     582     2,609     2,329  
   
Net (loss) income for the period   (317 )   113     (768 )   93  
   
(Loss) income per share - basic and diluted $ (0.02 ) $ 0.01   $ (0.05 ) $ 0.01  

Revenue

Total revenue for the three months ended June 30, 2010 decreased $331 thousand or 24% to $1.1 million compared with $1.4 million in the same period last year. Total revenue for the nine months ended June 30, 2010 decreased $1.2 million or 25% to $3.6 million compared with $4.8 million in the same period last year. The decrease in revenue for both periods was due mainly to the continued curtailed spending by our customers.

Gross margin

The total gross margin for the three months ended June 30, 2010 decreased $175 thousand or 25% to $520 thousand as compared with $695 thousand in the same period last year. The total gross margin for the nine months ended June 30, 2010 decreased $581 thousand or 24% to $1.8 million as compared with $2.4 million in the same period last year. The decrease was due to the lower level of revenue.

The gross margin as a percentage of revenue for the three months ended June 30, 2010 decreased to 49% compared with 50% in the same period last year. The decrease was due mainly to slightly lower productivity, due to fixed costs and lower revenue. The gross margin as a percentage of revenue for the nine months ended June 30, 2010 increased to 51% compared with 50% in the same period last year. The increase was due to cost reductions.

Sales and marketing

We maintain a direct sales force in the United States, Canada and Great Britain as well as a centralized marketing department located in British Columbia.

Sales and marketing expenses for the three months ended June 30, 2010 increased $8 thousand or 3% to $325 thousand compared with $317 thousand in the same period last year. The increase is due to new sales and marketing initiatives for the Chinese market of $83 thousand, offset by cost reductions of $75 thousand, including staff.

Sales and marketing expenses for the nine months ended June 30, 2010 decreased $273 thousand or 25% to $810 thousand compared with $1.1 million in the same period last year. The decrease is due to cost reductions including staff, which is offset by $186 thousand increase in the current year for the new sales and marketing initiatives for the Chinese market.

General and administration

We maintain a centralized executive and administrative support departments located in British Columbia.

General and administration expenses for the three months ended June 30, 2010 decreased $137 thousand or 27% to $379 thousand compared with $516 thousand in the same period last year. The decrease is due to cost reductions.

General and administration expenses for the nine months ended June 30, 2010 decreased $4 thousand or 1% to $1.2 million compared with $1.2 million in the same period last year. Cost reductions in the current year totaled $364 thousand, whereas in the prior period the costs of $1.2 million are net of certain non-recurring recoveries totaling $360 thousand including the recovery of a receivable previously written off.

Product development

We maintain a centralized product development department located in British Columbia. The expenses consist primarily of employee compensation costs as well as sub-contracted design and development services.

Product development expenses for the three months ended June 30, 2010 decreased $12 thousand or 9% to $115 thousand compared with $127 thousand in the same period last year. The decrease is due to certain cost reductions.

Product development expenses for the nine months ended June 30, 2010 increased $59 thousand or 18% to $383 million compared with $324 thousand in the same period last year. The increase is due to a reduction in the amount of staffing costs being allocated to cost of sales due to less work in the current year and the development of the Epic Data MES application for the Chinese market.

Net (loss) income

Net loss for the three months ended June 30, 2010 was $317 thousand compared to a net income of $113 thousand in the same period last year. In the prior year the Company had a refundable tax recovery of $505 thousand. If the tax recovery is excluded from the prior period the net loss would have been of $392 thousand.

Net loss for the nine months ended June 30, 2010 was $768 thousand compared to a net income of $93 thousand in the same period last year. The nine months ended June 30, 2009 was positively impacted by a refundable tax recovery of $505 thousand, a bad debt recovery of $40 thousand and certain other non-recurring recoveries of $360 thousand. In the absence of these amounts the nine months ended June 30, 2009 would have had a net loss of $812 thousand. This is compared with the net loss of $768 thousand for the nine months ended June 30, 2010, which includes cost reductions totaling $230 thousand, offset by additional spending of $186 thousand relating to the new sales and marketing initiatives for the Chinese market.

Financing Activities

On July 21, 2010 we closed a private placement of 4,423,077 common shares for gross proceeds of $575,000. A portion of this private placement remains subject to final approval of the TSX Venture Exchange. The proceeds will be used to market the Company's manufacturing operations management software products in China and for general working capital purposes.

Board Change

The Company announces that effective today Jason Cohenour has resigned from the Board of Directors. Management and the Board would like to thank Jason for his contributions over the past 6 years.

About Epic Data

For over 30 years Epic Data has delivered real-time shop floor information to the world's most progressive discrete manufacturers through turnkey data collection, warehouse management and lean manufacturing operations management solutions. Defense contractors, aerospace, automotive, high technology and industrial equipment and machinery manufacturers, employ Epic Data solutions to optimize the return on investment of their manufacturing information technology infrastructure investments and operations by increasing plant productivity, materials visibility and production velocity. Customers include Lockheed Martin, Bell Helicopter, Komatsu, Learjet, CAE Inc., Kingfisher plc, Joy Mining Machinery, Cobham Defence Communications Ltd., GE Aircraft Engine, Contour Premium Aircraft Seating, McBride plc, Phoenix Contact, Rolls-Royce and Volvo.

More information about Epic Data is available at www.epicdata.com

Caution Regarding Forward-looking Statements

In this document and in other documents filed with Canadian regulatory authorities or in other communications, the Company may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation, including statements regarding the Company's business plans and financial objectives. These statements typically use words such as prospects, believe, estimate, forecast, project, expect, anticipate, plan, may, should, could and would, or the negative of these terms, variations thereof or similar terminology. By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the forecasts, projections and other forward-looking statements will not be achieved or will prove inaccurate. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it provides no assurance that these expectations will prove to have been correct. The Company cautions readers against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various material factors. Among other things, these factors include fiscal and economic policies, changes in interest and foreign exchange rates, and general economic conditions, legislative and regulatory developments, competition and access to capital. The Company further cautions that the foregoing list of factors is not exhaustive. For more information on the risks, uncertainties and assumptions that would cause the Company's actual results to differ from current expectations, please also refer to the Company's public filings available at www.sedar.com. The Company does not undertake to update any forward-looking statements, whether oral or written, made by itself or on its behalf, except to the extent required by securities regulations.

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.

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