Epic Data International Inc.
TSX VENTURE : EKD

Epic Data International Inc.

May 26, 2011 16:46 ET

Epic Data Announces Q2 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 26, 2011) - 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 six months ended March 31, 2011.

Results of Operations
Three months endedSix months ended
March 31,March 31,
2011201020112010
Revenue$960,655$1,079,336$2,242,107$2,550,646
Cost of sales522,529553,9061,133,2651,230,259
Gross margin438,126525,4301,108,8421,320,387
Expenses
General and administration317,351423,459654,398823,180
Sales and marketing298,539275,325563,617485,022
Product development151,599143,693297,185268,134
Amortization of property, plant and equipment19,19412,11427,87036,750
Net finance charges17,55414,62828,71729,408
Stock based compensation9,9835,63715,21210,764
Foreign exchange34,11550,15466,17071,767
Interest accretion1,419-1,419-
Severance-41,120-45,991
849,754966,1301,654,5881,771,016
Net loss for the period(411,628)(440,700)(545,746)(450,629)
Loss per share - basic and diluted$(0.02)$(0.03)$(0.02)$(0.03)

Results of Operations for the Three and Six months ended March 31, 2011

Revenue

Revenue for the three months ended March 31, 2011 decreased $118,681 or 11% to $960,655 compared with $1,079,336 in the same period last year. Revenue for the six months ended March 31, 2011 decreased $308,539 or 12% to $2,242,107 compared with $2,550,646 in the same period last year. The decrease in revenue for both periods was due to curtailed spending by our customers and the stronger Canadian dollar, which negatively impacted revenue for the three and six months ended March 31, 2011 by approximately $61,000 and $163,000, respectively.

Gross Margin

The gross margin for the three months ended March 31, 2011 decreased $87,304 or 6% to $438,124 as compared with $525,430 in the same period last year. The gross margin for the six months ended March 31, 2011 decreased $211,545 thousand or 16% to $1,108,842 as compared with $1,320,387 in the same period last year. The decrease was due to the lower revenue.

The gross margin as a percentage of revenue for the three months ended March 31, 2011 decreased to 46% compared with 49% in the same period last year, while for the six months ended March 31, 2011 decreased to 50% compared with 52% in the same period last year. The decreases were due mainly to lower productivity, especially in professional services, with fixed costs and lower revenue.

General and administration

General and administration expenses for the three months ended March 31, 2011 decreased $106,108 or 25% to $317,351 compared with $423,459 in the same period last year. General and administration expenses for the six months ended March 31, 2011 decreased $140,039 or 17% to $683,141 compared with $823,180 in the same period last year. The decrease is principally due to lower staff levels, lower head office rent and a recovery of building operating costs in the second quarter of 2011 of approximately $63,000.

Sales and marketing

Sales and marketing expenses for the three months ended March 31, 2011 increased $23,214 or 8% to $298,539 compared with $275,325 in the same period last year. Sales and marketing expenses for the six months ended March 31, 2011 increased $90,951 or 24% to $575,973 compared with $485,022 in the same period last year. The increase in both periods is due primarily to the opening of the representative office in China for the new marketing initiatives in China.

Product development

Product development expenses for the three months ended March 31, 2011 increased $7,906 or 6% to $151,599 compared with $143,693 in the same period last year. Product development expenses for the six months ended March 31, 2011 increased $29,051 or 11% to $297,185 compared with $268,134 in the same period last year. The increases in both periods is due to the development of the Epic Data MES suite of application for the China market and a reduction in the amount of staffing costs being allocated to cost of sales resulting from less project work in the current periods compared to the same period last year.

Net loss

Net loss for the three months ended March 31, 2011 decreased $29,072 or 7% to $411,628 compared with $440,700 in the same period last year. Net loss for the six months ended March 31, 2011 increased $136,216 or 30% to $586,845 compared with $450,629 in the same period last year.

Financing Activities

In February 2011 the Company entered into a loan agreement with North-America VanStar Investments Ltd. ("NA VanStar"), a company controlled by a director, where the Company received a loan of $2,000,000 with interest at 5% per annum payable semi-annually. The principal is due in five years. As security for the loan, the Company provided NA VanStar with a general security agreement over all assets of the Company. In addition the Company issued NA VanStar warrants for the purchase of 500,000 common shares at $0.09 per share. The warrants expire the earlier of January 30, 2016 or on the repayment of the loan in full. The proceeds of the loan will be primarily used to develop operations in China.

About Epic Data

Epic Data International Inc. is a provider of manufacturing operations management and warehouse management solutions. For 36 years Epic Data has delivered real-time data collection and production information to discrete manufacturers through turnkey data collection, warehouse management and lean manufacturing operations management solutions. Defense contractors, aerospace, automotive, high technology and industrial equipment & machinery manufacturers, employ Epic Data solutions to optimize the ROI of their manufacturing IT infrastructure investments and operations by increasing plant productivity, materials visibility and production velocity. Customers include Hawker Beechcraft, Lockheed Martin, Bell Helicopter, Komatsu, Bombardier Learjet, CAE Inc., Kingfisher (B&Q) plc, Joy Mining Machinery, Cobham Defence Communications Ltd., GE Aircraft Engine, Contour Premium Aircraft Seating, McBride plc, Phoenix Contact, Rolls-Royce and Volvo.

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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