FOR IMMEDIATE RELEASE
GLOBAL EPOINT REPORTS ON
RESULTS FOR
THE SECOND QUARTER
Company Continues to Move Forward with Strategic Transitioning to New Market
Opportunities and Terminates Certain International Projects
San Marcos, California, August 15, 2002 – GLOBAL EPOINT, INC. (the “Company”)
(NASDAQ/NMS: GEPT) today reported on results of operations for the second
quarter and six months ended June 30, 2002.
As previously announced, on June 1, 2001, the Company completed the sale of
those assets used in its then existing lottery business, relating to the
manufacture, sale, lease and service of instant lottery ticket vending machines.
As a result of the sale, the previous operations related to the lottery assets
have been reflected as discontinued operations on the Company’s financial
statements. The sale was the first major step in the Company’s long-term
corporate strategy, which is intended to enhance shareholder value by
transforming the Company from its then existing business structure into a
structure more able to take advantage of new market opportunities.
During the second quarter of 2002, the Company continued its efforts to
strategically transition into new market opportunities. As part of these
efforts, in July 2002, the Company commenced initial operations of its telephony
subsidiary. The results of those operations will begin to be shown in the 2002
third quarter. Full operations of the subsidiary are not expected to commence
until the 2002 fourth quarter. Also during the second quarter, the Company
terminated certain international projects due to the social-political
environment in the countries in which the Company was attempting to do business.
The Company now intends to focus primarily on domestic opportunities although it
will continue to review international opportunities on a case-by-case basis.
For the 2002 second quarter, the Company generated revenue from continuing
operations of approximately $65 thousand, versus revenue of approximately $48
thousand in the prior year comparable period. Operating expenses for the 2002
second quarter were approximately $649 thousand, including restructuring costs
of $118 thousand and costs of abandoned projects of $350 thousand, versus
operating expenses of approximately $710 thousand for the prior year comparable
quarter. As a result, the Company reported a loss from continuing operations of
$584 thousand ($.13 per share) for the 2002 second quarter, versus a loss from
continuing operations of $662 thousand ($.14 per share) for the prior year
comparable quarter. Without restructuring and abandoned project costs, the 2002
second quarter operating expenses and loss from continuing operations would have
been $181 thousand and $116 thousand, respectively.
For the 2002 six-month period, the Company generated revenue from continuing
operations of approximately $151 thousand, versus revenue of approximately $54
thousand in the prior year comparable period. The increase was primarily from
interest and investment income resulting from the increase in the Company’s cash
reserves and investments during that period. Operating expenses for the 2002
six-month period were approximately $1 million, including restructuring costs of
$324 thousand and costs of abandoned projects of $350 thousand, versus operating
expenses of approximately $1.3 million for the prior year comparable period. As
a result, the Company reported a loss from continuing operations of $883
thousand ($.19 per share) for the 2002 six-month period, versus a loss from
continuing operations of approximately $1.3 million ($.28 per share) for the
prior year comparable period. Without restructuring and abandoned project costs,
the 2002 six-month period operating expenses and loss from continuing operations
would have been $360 thousand and $209 thousand, respectively.
The prior year three and six-month periods also included approximately $2.8
million ($.61 per share) and $3.1 million ($.70 per share), respectively, of
gains from discontinued operations. The loss from continuing operations combined
with the gain from discontinued operations resulting in net income of
approximately $2.2 million ($.47 per share) and $1.9 million ($.42 per share) in
the respective three and six-month periods ended June 30, 2001. The 2002 three
and six-month periods did not have discontinued operations.
As of June 30, 2002, the Company maintained approximately $4.8 million in cash
and cash equivalents and net tangible equity of approximately $8.5 million. The
cash funds have been primarily placed into short-term, highly liquid investments
pending the completion of the Company’s strategic initiatives.
Frederick Sandvick, the Company’s Chairman and Chief Executive Officer,
commented, “As previously reported, we have set forth on a series of actions
intended to transform the Company; and to strategically move forward with new
market opportunities that can better enhance shareholder value. During the
second quarter of 2002, we continued to move forward with our plans to
transition into new market opportunities. In that regard, we have been
undergoing restructuring costs that primarily relate to readying our existing
inventory of card dispensing equipment for redeployment and sale. In July 2002,
we commenced initial operations of a new division, named Global Telephony, which
was formed primarily to redeploy and sell the Company’s approximate $3.4 million
of card dispensing equipment in the high-volume, cash-oriented prepaid telephony
market. We anticipate the full launch of this new division by the fourth quarter
of 2002. We caution, however, that although we are optimistic as to the success
of this new division, we face all the risks a new business in a mature market
faces and no assurances can be given that we will be successful.
“We also are continuing to review possible merger and acquisition candidates as
well as other market opportunities. We remain extremely optimistic that we will
be able to accelerate our entry into a new market opportunity through a merger
or acquisition. Our goal is to select the market opportunities that best
leverage our management expertise, technological property, international
relationships, and corporate value, while maximizing our abilities to enhance
shareholder value. Although the Company faces considerable changes,
opportunities, risks and challenges ahead, we are excited about the future. We
look forward to reporting our progress as we move forward with our plans.”
About the Company
Global ePoint has provided effective technologies for transaction automation
since its formation in 1991. Global ePoint pioneered the development of the
instant ticket vending machine for lotteries worldwide and has designed sold,
leased and serviced high-security vending machines both domestically and
internationally. Global ePoint sold its lottery business on June 1, 2001, and is
now proceeding with plans to enter into new market opportunities.
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
proposed equity raises, which may be necessary for the Company to implement its
plans to develop new market opportunities, continued acceptance of the Company’s
products and services in the marketplace, competitive factors, new products and
technological changes, the Company’s successful entry into new markets, the
Company’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 the Company’s periodic filings with the Securities and
Exchange Commission.
Global ePoint, Inc.
Selected Financial Information
(In thousands, except per share data)
(Thousand of dollars/shares, except per share amounts) Three Months Ended June
30,
2002 2001
Revenues $65 $48
Loss from continuing operations $(584)(A) $(662)
Income from discontinued operations – $2,848
Net Income (loss) $(584)(A) $2,186
Earnings (loss) per share:
Continuing operations $(.13)(A) $(.14)
Discontinued operations – $.61
Net income (loss) $(.13)(A) $.47
Six Months Ended June 30,
2002 2001
Revenues $151 $54
Loss from continuing operations $(883)(B) $(1,251)
Income from discontinued operations – $3,142
Net Income (loss) $(883)(B) $1,891
Earnings (loss) per share:
Continuing operations $(.19)(B) $(.28)
Discontinued operations – $.70
Net income (loss) $(.19)(B) $.42
(A) Includes $468 of restructuring costs and costs of abandoned projects
(B) Includes $674 of restructuring costs and costs of abandoned projects
For More Information Contact:
Frederick Sandvick, Chief Executive
Officer
Global
ePoint,
Inc.
1370 West San Marcos Blvd. Suite 100
San Marcos, CA 92069
Tel: 760-510-4900
FAX: 760-510-4949
Internet: [email protected]
