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 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 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.
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