For
Immediate Release
GLOBAL EPOINT REPORTS ON RESULTS FOR
THE THIRD QUARTER
Company Continues to Move Forward with Strategic Transitioning
to New Market Opportunities
San Marcos, California, November 14, 2002 – GLOBAL EPOINT, INC. (the “Company”)
(NASDAQ/NMS: GEPT) today reported on results of operations for the third quarter
and nine months ended September 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.
For the 2002 third quarter, the Company’s revenues from continuing operations
increased from $218 thousand in the prior year comparable quarter to $230
thousand in the 2002 third quarter. Operating expenses, which included cost of
sales, selling, general and administrative expenses, interest expense and
restructuring costs, decreased from $478 thousand in the prior year comparable
quarter to $429 thousand in the 2002 third quarter. Included in operating
expenses were restructuring costs of approximately $112 thousand in the 2002
third quarter and $144 thousand in the prior year comparable quarter. As a
result, the Company reported a loss from continuing operations of $199 thousand
($.04 per share) for the 2002 third quarter, versus a loss from continuing
operations of $260 thousand ($.06 per share) for the prior year comparable
quarter.
During the third quarter of 2002, the Company continued its efforts to
strategically transition into new market opportunities. As part of those
efforts, in July 2002, the Company commenced initial operations of its telephony
subsidiary, which was formed to establish a business that could sell prepaid
telephony and take advantage of the Company’s inventory of card dispensing
equipment. The initial operations were intended to test the market on a small
scale and determine if expansion of those operations would be beneficial. The
Company is continuing to review how best to proceed with those operations.
For the 2002 nine-month period, the Company’s revenues from continuing
operations increased from $272 thousand in the prior year comparable period to
$380 thousand in the 2002 nine-month period. Although revenues increased,
operating expenses decreased from approximately $1.8 million in the prior year
comparable period to approximately $1.5 million in the 2002 nine-month period.
Included in operating expenses for the 2002 nine-month period were restructuring
costs of $436 thousand and costs of abandoned projects of $350 thousand.
Included in operating expenses for the prior year comparable period were
restructuring costs of $144 thousand. As a result, the Company reported a loss
from continuing operations of approximately $1.1 million ($.23 per share) for
the 2002 nine-month period, versus a loss from continuing operations of
approximately $1.5 million ($.33 per share) for the prior year comparable
period. Without restructuring and abandoned project costs, the 2002 nine-month
period loss from continuing operations would have been approximately $295
thousand and the prior year comparable period loss from continuing operations
would have been approximately $1.4 million.
The prior year nine-month period also included approximately $3.1 million ($.68
per share) of income from discontinued operations. The loss from continuing
operations combined with the gain from discontinued operations resulting in net
income of approximately $1.6 million ($.35 per share) in the nine-month period
ended September 30, 2001. The 2002 three and nine-month periods did not have
discontinued operations.
As of September 30, 2002, the Company maintained approximately $4.5 million in
cash and cash equivalents and net tangible equity of approximately $8.3 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 third 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. We have been
expending costs to retrieve and refurbish approximately 2,000 card dispensing
machines that were previously on lease with a customer and deployed at retail
locations throughout various states. Once retrieved, we have been refurbishing
the equipment to ready it for redeployment or sale. We believe we have completed
approximately 80% of the retrieval process and approximately 65% of the
refurbishment process. Once fully completed, the restructuring costs associated
with this process will end.
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 card
dispensing equipment in the high-volume, cash-oriented prepaid telephony market.
The initial operations are currently being reviewed by us to evaluate the market
and to determine whether expansion of those operations would be beneficial. 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 Global ePoint
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. and Subsidiaries
Selected Financial Information
(In thousands, except per share data)
(Thousand of dollars/shares, except per share amounts) Three Months Ended
September 30,
2002
2001
Revenues $230 $218
Loss from continuing operations $(199)(A) $(260)(B)
Discontinued operations --
--
Net loss $(199)(A) $(260)(B)
Earnings (loss) per share:
Continuing operations $(.04) $(.06)
Discontinued operations
-–
- -
Net income (loss) $(.04) $(.06)
Nine Months Ended September30,
2002
2001
Revenues $380 $272
Loss from continuing operations $(1,081)(C) $(1,511)(B)
Income from discontinued operations
-– $3,142
Net income (loss) $(1,081)(C) $1,631(B)
Earnings (loss) per share:
Continuing operations $(.23) $(.33)
Discontinued operations –- $.68
Net income (loss) $(.23) $.35
(A) Includes $112 of restructuring costs
(B) Includes $144 of restructuring costs
(C) Includes $786 of restructuring costs and costs of abandoned projects
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]