SAN MARCOS, Calif., April 4, 2002 (PRIMEZONE) -- Global ePoint, Inc. (Nasdaq:GEPT) (the "Company") reported on its results of operations for the year ended December 31, 2001 and its progress in transitioning into new market opportunities.
As previously reported, on June 1, 2001, the Company completed the sale of those assets used in its existing lottery business, relating to the manufacture, sale, lease and service of instant lottery ticket vending machines. That sale was the first major step in a deliberate corporate strategy designed 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.
The Company generated net income of $1.2 million in 2001 ($.27 per share) versus a net loss of $2.8 million in 2000 (a negative $.78 per share). Included in those results was income from discontinued operations of $3.1 million in 2001 ($.69 per share) and $.8 million in 2000 ($.21 per share). As a result of the sale of the lottery assets, the Company's previous operations that related to the lottery assets have been reflected as discontinued operations on the Company's financial statements.
Revenues from continuing operations for 2001 were $435,000 versus $76,000 in 2000. The increase in revenue was primarily from interest and investment income resulting from the Company's cash reserves and investments generated from the sale of the lottery assets on June 1, 2001. Total operating expenses from continuing operations was reduced from $3.1 million in 2000 to $2.3 million in 2001 primarily as the result of a reduction in payroll, payroll related expenses and interest expense. Included in operating expenses for 2001 were restructuring costs of $477,000 that consisted of payroll, facilities costs, refurbishment costs and certain other charges incremental to restructuring operations and preparing for new business activities. Such costs are expected to be completed by the fall of 2002. Continuing operations in 2000 were affected by $406,000 of income from the termination of a prior merger attempt and by $1 million of costs for the settlement of a shareholder class action. As a result of the above, the Company reported a net loss from continuing operations of $1.9 million in 2001 ($.42 per share) and $3.6 million in 2000 ($.99 per share).
Frederick Sandvick, the Company's Chairman and Chief Executive Officer, commented, "We are very pleased to have been able to make significant progress in the strategic transformation of our Company in 2001. Our choice to sell our lottery assets has already provided enhanced shareholder value."
In 2001, instead of refinancing and diluting existing shareholder equity, the Company chose to sell its lottery business in order to provide the necessary capital resources to proceed with new market opportunities. As a result, the Company now has over $5 million in cash and liquid assets, over $9 million of net assets and no debt. Additionally, the Company's assets and equipment will provide the opportunity to expand into a new market through their redeployment. Further, the sale of its lottery assets continues to provide the Company with opportunities for continuing revenue streams. The Company has arrangements that can provide up to $15 million in deferred and earn-out payments if its contractual agreements and technologies that were transferred generate additional profits and revenues for the buyer.
The Company now intends to commence the second major step in its transformation process in 2002, through the redeployment and sale of its card dispensing equipment. The Company anticipates in 2002 the launch of a new division, named Global Telephony, in the high-volume, cash-oriented prepaid telephony market.
As the Company previously announced, it also has been in merger discussions with Fusion Telecommunications International, Inc., a specialized international communications service provider. However, the Company has yet to reach a definitive agreement with Fusion and, therefore, if this proposed merger is not consummated, the Company will continue to review other possible merger and acquisition candidates during 2002 as well as other market opportunities. Mr. Sandvick added, "Although the Company faces considerable changes, opportunities and challenges ahead, we are excited about the future."
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, successful completion of proposed funding raises, which may be necessary for us to implement 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)
Year Ended December 31,
2001 2000
------ ------
Revenues $ 435 $ 76
Loss from continuing
operations $(1,915)(a) $(3,584)(c)
Income from discontinued
operations $ 3,142(b) $ 760
Net income (loss) $ 1,227(a)(b) $(2,824)(c)
Earnings (loss) per share
-- basic and diluted:
Continuing operations $ (.42)(a) $ (.99)(c)
Discontinued operations $ .69(b) $ .21
Net income (loss) $ .27(a)(b) $ (.78)(c)
Weighted average shares
-- basic and diluted 4,543 3,623
(a) Includes restructuring costs of $477 in 2001
(b) Includes gain on sale of discontinued operations of $2,744 in
2001
(c) Includes income of $406 from a proposed merger termination and
expense of $1,000 from a settlement of shareholder class actions
in 2000