CITY OF INDUSTRY, Calif., Aug. 21 /PRNewswire-FirstCall/ -- Global ePoint, Inc. (Nasdaq: GEPT - News), a leading manufacturer of digital surveillance and detection solutions, today reported financial results for its second quarter ended June 30, 2006. Second quarter total revenue of $8.2 million represented an increase of 59 percent over total revenue of $5.2 million in the second quarter of 2005. For the first six months of 2006, Global ePoint recorded record total revenue of $15.5 million, an increase of 46 percent over total revenue $10.7 million for the first six months of 2005.
Increased revenue in both the second quarter and the first half of 2006 resulted from higher sales in both the Company’s Aviation and Contract Manufacturing Divisions. Revenue from the Aviation Division, which is comprised of Global AirWorks, increased to $1.6 million in the second quarter from $0.3 million in the prior year second quarter, and increased to $3.3 million in the first six months of 2006 from $0.8 million in the comparable prior year period. The Contract Manufacturing Division saw second quarter revenue increase by $1.7 million over the prior year's second quarter to $6.2 million and revenue for the first six months of 2006 increase by $2.5 million over the prior year period to $11.6 million.
Global ePoint reported a net loss of $2.1 million for the second quarter of 2006 compared to a net loss of $1.8 million for the same period in the prior year. The Company reported a net loss applicable to common stockholders of $7.1 million, or a loss of $0.43 per share, for the second quarter ended June 30, 2006, compared to a net loss applicable to common stockholders of $2.7 million, or a loss of $0.22 per share, in the second quarter of 2005. The larger net loss was due to increased investments in marketing and R&D; for new products in the Company's Digital Technology and Aviation Divisions. The net loss applicable to common stockholders includes a non-cash preferred dividend of $4.9 million in the second quarter of fiscal 2006 and $.9 million in the second quarter of fiscal 2005.
Global ePoint reported working capital of $9.0 million as of June 30, 2006.
Global ePoint had a net loss of $4.2 million for the six months ended June 30, 2006, compared to a net loss of $3.5 million in the same period in the prior year. The Company reported a net loss applicable to common stockholders of $9.3 million, or a loss of $0.58 per share, for the six months ended June 30, 2006, compared to a net loss applicable to common stockholders of $4.9 million, or a loss of $0.39 per share, for the six months ended June 30, 2005. The net loss applicable to common stockholders includes a non-cash preferred dividend of $5.1 million in the first six months of fiscal 2006 and $1.4 million in the first six months of fiscal 2005.
"During the second quarter and the first half of this year we saw revenue from our Aviation Division increase almost four fold over the same periods from last year," said Toresa Lou, Global ePoint’s Chief Executive Officer. "Many of the growth initiatives we began in 2005 have begun delivering strong revenue growth the first half of the year.
"We believe the opportunities in our Aviation Division remain substantial. We expect that the Federal Aviation Administration (FAA) and similar regulatory agencies worldwide will enact legislation mandating additional cockpit security, which we believe will act as a catalyst for airlines to place orders for our Cockpit Door Surveillance Systems (CDSS). Currently only 10 countries around the world have mandated cockpit surveillance, representing only a fraction of the total commercial aircraft market. Global AirWorks has captured over 80% of the German market for cockpit surveillance, and we look forward to other countries mandating this essential security solution in the future. We continue to believe that 2006 will be a year of strong growth and profitability by year-end as a result of the expected FAA mandate.
"During the second quarter of 2006, we received CDSS orders from the UK's leading leisure airline, First Choice Airways, as well as from International Lease Finance Corporation (ILFC), the world's largest lessor of new aircraft. Our Cockpit Door Surveillance System continues to be one of the industry's leading solutions for commercial airlines looking to comply with cockpit surveillance mandates.
"We also saw revenue increase in our Digital Technology and Contract Manufacturing divisions during the quarter and first six months of the year," continued Lou. "Our Digital Technology Division, following the acquisition of Tops Digital Security, now provides the most comprehensive digital video surveillance solutions on the market. Our solutions serve customers from the low-end commercial and industrial markets all the way to the high-end commercial, industrial, and government electronic security markets. We continue to believe that the Tops acquisition will drive revenue growth moving forward as we focus on law enforcement, commercial and industrial security applications."
Financial Outlook
The Company reiterates its expectation for 2006 full-year revenue target of $50-$60 million and expects revenue increases from the Digital Technology and Aviation Divisions, will generate higher margins.
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