Epic Data Announces Q2 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 29, 2013) - Epic Data International Inc. (TSX VENTURE:EKD) (the "Company" or "Epic Data"), a provider of manufacturing execution systems (MES), today announced the results of operations for the three and six months ended March 31, 2013.

Results of Operations

Results of Operations for the Three and Six months ended March 31, 2013

Revenue

Revenue for the three months ended March 31, 2013 increased $556,519 or 47% to $1,749,865 compared with $1,193,346 in the same period last year. Revenue for the six months ended March 31, 2013 increased $860,434 or 42% to $2,923,283 compared with $2,062,849 in the same period last year. The increase in revenue in both periods was due to revenue from the Epic-HUST JV in China. During the quarter ended March 31, 2013, the Company has determined that outcome of certain contracts of its China subsidiaries that involve the rendering of services cannot be measured reliably, primarily because the stage of completion could not be measured reliably. However, where cash has been received and it is probable that costs will be recovered, revenue has been recorded in an amount equal to costs incurred.

Gross Margin

The gross margin for the three months ended March 31, 2013 increased $281,530 or 55% to $793,124 as compared with $511,594 in the same period last year. The gross margin for the six months ended March 31, 2013 increased $71,248 or 7% to $1,046,907 as compared with $975,659 in the same period last year. The increase in both periods was due to the increased revenue levels in China.

General and administration

General and administration expenses for the three months ended March 31, 2013 increased $32,511 or 6% to $602,020 compared with $569,509 in the same period last year. General and administration expenses for the six months ended March 31, 2013 increased $139,214 or 13% to $1,224,654 compared with $1,085,440 in the same period last year. The increase in both periods is due primarily to the continued expansion of operations in China.

Sales and marketing

Sales and marketing expenses for the three months ended March 31, 2013 decreased $83,845 or 21% to $307,184 compared with $391,029 in the same period last year. Sales and marketing expenses for the six months ended March 31, 2013 decreased $67,246 or 9% to $711,837 compared with $779,083 in the same period last year. The decrease in both periods is due primarily to reduced sales personnel costs in Canada and the United Kingdom, primarily compensation.

Product development

Product development expenses for the three months ended March 31, 2013 decreased $46,725 or 11% to $371,905 compared with $418,630 in the same period last year as staff in China were diverted to revenue generating projects. Product development expenses for the six months ended March 31, 2013 increased $87,975 or 13% to $759,450 compared with $671,475 in the same period last year principally due to the development of the UniView, our new shop floor terminal that supports browser-based web applications and high security, and the continued development of our Integra suite of MES solutions.

Net Finance Charges

Net finance charges for the three months ended March 31, 201 increased $73,663 or 222% to $106,850 compared with $33,187 in the same period last year as a result of the increased loans funding operations. The decrease is due to the partial repayment of the term loan in November 2011. Net finance charges for the six months ended March 31, 2013 decreased $146,868 or 43% to $195,021 compared with $341,889 in the same period last as the prior period had an interest accretion charge of $301,687, related to the repayment of debt in the prior year and higher interest charges on new debt in the current period.

Net loss

Net loss for the three months ended March 31, 2013 decreased $324,836 or 35% to $600,958 compared with $925,794 in the same period last year. Net loss for the six months ended March 31, 2013 decreased $81,238 or 4% to $1,851,202 compared with $1,932,440 in the same period last year. The decrease in the net loss in both periods resulted from the improved operations in China as certain revenue recognition criteria have been met.

Transaction with Sylogist

On May 8, 2013 the Company entered into an agreement (the "Arrangement Agreement") with Sylogist Ltd. ("Sylogist"), a Calgary based company listed on the TSX Venture Exchange. The transactions contemplated under the Arrangement Agreement will be effected by way of a Plan of Arrangement (the "Arrangement") under the British Columbia Business Corporations Act. Under the Arrangement, Epic Data will transfer to Epic Fusion Corp ("Epic Fusion"), a newly incorporated subsidiary, (i) its investments in Epic Data Systems (Shanghai) Co., Ltd and Epic-Hust Technology (Wuhan) Co., Ltd; (ii) cash proceeds of $5 million less the amount of the working capital deficiency of the Company at the date of closing; (iii) a perpetual royalty free license to use certain of the Company's technology in China; and (iv) certain other assets. In addition, under the Arrangement, Epic Fusion will assume the convertible debentures, term loans and certain other current liabilities of the Company, all of which have an estimated carrying value of $3.7 million as at April 30, 2013. Under the Arrangement the current shareholders of the Company will receive an equal number of common shares of the Epic Fusion for their common shares of the Company. Shareholders of the Company will not receive any cash payment in connection with the Arrangement.

The Company will be holding a special meeting of shareholders on June 25, 2013 to seek shareholder approval for the Arrangement. Further information is available in the Company's Information Circular dated May 28, 2013 which is being mailed to shareholders and will be available on SEDAR (www.sedar.com). The Arrangement is expected to close on July 1, 2013.

Loan Financing

The Company announces that it has entered into a loan agreement with Sylogist, to receive up to $600,000 to fund general working capital requirements until closing of the Arrangement. The principal amount of the loan will be due on July 1, 2013 and will bear interest at the rate of 5% per annum. In connection with this loan, the Company has executed a general security agreement granting to Sylogist security over all the assets of the Company.

About Epic Data

Epic Data International Inc. has produced manufacturing execution and warehouse management solutions for 40 years. Epic Data solutions synchronize supply chain and production activities to achieve real-time visibility of manufacturing metrics that reduces cycle times and costs, optimizes production planning and control, and boosts quality and efficiency. The solutions are easily implemented either by module or as a completely integrated solution suite across the global enterprise. Customers include Lockheed Martin, Bell Helicopter, Komatsu, Hawker Beechcraft, 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.

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, including the closing of the Arrangement and the date of the meeting of shareholders of the Company. 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, access to capital, and the Company's ability to satisfy the closing conditions in the Arrangement Agreement. 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.