FOR IMMEDIATE RELEASE
GLOBAL EPOINT ANNOUNCES DEFINITIVE
AGREEMENT
TO MERGE WITH HOMELAND SECURITY COMPANY
Merger is Part of Series of Transactions Designed to Transform
Global ePoint and
Enhance Shareholder Value
SAN MARCOS, California, April 2, 2003 – GLOBAL EPOINT, INC. (“Global”) (NASDAQ/”GEPT”)
today announced that it has signed a definitive agreement (the “Agreement”) to
acquire 100 percent of the issued and outstanding stock of McDigit, Inc. (“McDigit”).
McDigit, through its subsidiary Best Logic and its acquisition of the long-range
video, audio, and data transmission system technology and related brands from
Sequent Technologies, Inc., is positioning itself to become a leading provider
of Homeland Security technology.
The Agreement provides for an exchange of securities pursuant to which Global
will acquire all of the issued and outstanding equity securities of McDigit in
exchange for an aggregate, subject to certain performance conditions, of not
less than 5,920,745 shares of Global’s common stock, approximately 55.1% of
Global’s common stock post-merger. Upon achievement of financial milestones for
the fiscal years 2003, 2004 and 2005, as specified in the Agreement,
shareholders of McDigit may be entitled to receive additional shares of Global’s
common stock, with the aggregate of such issuances not to exceed 80% of the
total of the then outstanding Global common stock, including options, warrants
or similar instruments that may be issued to the equity holders of McDigit
pursuant to the Agreement.
Upon execution of the Agreement, McDigit paid Global a good faith $300,000
deposit, which will only be refundable under certain limited conditions. Global
intends to file with the Security Exchange Commission within the next 10 days
proxy materials for a special meeting of shareholders for the purpose of voting
on the approval of the merger. The Agreement is subject to a number of
conditions, the most significant of which are shareholder approvals and the
requirement that McDigit provide forecasts, based on reasonable expectations of
its management and founded by reviewable assumptions, showing that its financial
performance for 2003 will exceed $30 million in revenue and $3 million in net
income.
“We are excited about the opportunity to merge with Global ePoint,” said Johnny
Pan, principal shareholder of McDigit. “The anticipated merger with Global
ePoint will provide additional assets, including management and international
relationships, that can significantly assist in accelerating the growth of the
companies.”
Frederick Sandvick, Global’s Chairman and Chief Executive Officer, commented,
“We are very pleased to have negotiated what we believe can be a very
synergistic and growth-oriented merger for Global. McDigit can provide Global
with immediate revenue from proven on-going business as well as exciting new
products that can accelerate the Company’s launch into a large and expanding
market. Over the past two years, we have set forth on a series of actions
intended to transform Global and to strategically move forward with new market
opportunities. On June 1, 2001, we sold our core lottery business in order to
provide us the liquidity and up front cash we required to proceed with our
strategic initiatives. The sale of our lottery business was the first major step
in Global’s transformation process and the entry into a new market opportunity
will be our second major step.”
Sandvick noted, “We believe this merger not only provides our shareholders
tremendous upside potential, it provides certain synergistic abilities to assist
Global in maximizing its current asset values. Aside from the over $4 million of
cash and liquid assets, Global has over $3 million in card dispensing equipment,
up to a potential of $15 million in future earn-out payments from the sale of
its lottery business, and rights it has retained to a proprietary design for the
world’s first on-line activated instant lottery ticket. Based on the management
breadth, and on the domestic and international relationships of the proposed
combined companies, we believe that we will be strategically positioned to
pursue the exploitation of our combined target markets.”
About Global ePoint
Global ePoint has been in the process of a major transition over the past two
years. The Company is undergoing a series of actions intended to transform
itself and move forward with new market opportunities that can better enhance
shareholder value. Global ePoint had been engaged in the lottery industry over
the past 10 years and was one of the largest providers of vending machines for
the sale of instant-winner lottery tickets. On June 1, 2001, all of Global
ePoint’s lottery assets were sold to Interlott Technologies, Inc. Along with the
cash it received upon the sale, the Company retained rights to contingent
earn-out payments and certain other rights to a proprietary design for on-line
activated instant lottery tickets. Subsequent to the sale of the lottery assets,
the Company has been actively reviewing (i) opportunities that involve the
acquisition of or merger with companies that have new business activities with
high growth potential, and (ii) marketing plans to maximize the value of the
Company’s existing non-lottery related products, which consist primarily of card
dispensing equipment.
About McDigit
Headquartered in the City of Industry, California, McDigit was originally
organized in November 2002 for the purpose of marketing advanced technology
products related to long-range video, audio, and data transmission. Effective
January 1, 2003, the shareholder of McDigit contributed 100% of his ownership
interest in Best Logic, LLC (“Best Logic”) to McDigit. Best Logic manufactures
customized computers and provides comprehensive solutions for industrial
personal computer, commercial personal computer and contract manufacturing
markets. Currently, substantially all of Best Logic’s revenues have been
generated from sales of industrial computer applications to companies that
supply x-ray security equipment for the airline industry. Best Logic will
continue operations as a wholly owned subsidiary of McDigit. For more
information on Best Logic, visit its website at
www.bestlogic.net.
Also effective January 1, 2003, McDigit obtained sales and marketing rights to a
long-range video, audio, and data transmission system, called the “Ranger
System.” Effective March 30, 2003, McDigit purchased the remaining rights to the
Ranger System from Sequent Technologies, Inc. (“Sequent”). Those rights included
provisional patent applications, manufacturing designs, and other intellectual
property related to the Ranger System in order to market and deploy the product
throughout the world. McDigit plans to continue pursuing the marketing and
deployment of the Ranger System under the Sequent brand name. Sequent’s systems
transmit video, audio and data streams from anywhere using virtually any data
transmission system and the Internet. Sequent’s ability to network video
surveillance systems and provide secure access via existing Internet, cellular
and computer interfaces is designed to enhance the potential use of video in Law
Enforcement, Public Safety, Commercial Security, Homeland Defense,
Airport/Airline, and Military applications. For more information on Sequent,
visit its website at
www.sequentusa.com.
Any forward-looking statements in this release are made pursuant to the “safe
harbor” provisions of the Private Securities Litigation Act of 1995. Investors
are cautioned that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties including, but not limited to, the successful completion of the
proposed merger with McDigit, the successful completion of equity raises, which
may be necessary for Global to implement its plans to develop new market
opportunities, continued acceptance of Global’s products and services in the
marketplace, competitive factors, new products and technological changes,
Global’s successful entry into new markets, Global’s ability to increase its
customer base, as well as general, political and other uncertainties related to
customer purchases and agreements and other risks detailed in Global’s periodic
filings with the Securities and Exchange Commission.
For More Information Contact:
Frederick Sandvick, Chief Executive Officer
Global
ePoint,
Inc.
P.O. Box 3888
La Mesa, CA 91944
Tel: (760) 741-7443 ext. 13
FAX: (760) 741-7711
Email: [email protected]