SAN MARCOS, Calif., Nov. 16, 2001 (PRIMEZONE) -- Global ePoint, Inc. (Formerly On-Point Technology Systems, Inc.) (the Company) (Nasdaq:GEPT) today reported on results of operations for the third quarter and nine months ended September 30, 2001.
As previously announced, 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. 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. During the third quarter of 2001, the Company continued its efforts to strategically transition into new market opportunities.
For the 2001 third quarter, the Company generated revenue from continuing operations of approximately $218 thousand versus revenue of approximately $34 thousand in the prior year comparable period. The increase in revenue was primarily from interest and investment income resulting from the Company's cash reserves and investments. Operating expenses for the 2001 third quarter were approximately $478 thousand, including restructuring costs of $144 thousand, versus operating expenses of $639 thousand for the prior year comparable quarter. Without restructuring costs, the Company's operating expenses were $334 thousand for the 2001 third quarter, approximately one-half of the prior year's operating expenses. Included in the prior year third quarter results was income of $855 thousand from the termination of an uncompleted merger transaction. As a result of the above, the Company reported a net loss of approximately $260 thousand ($.06 per share) for the 2001 third quarter, versus net income of approximately $243 thousand ($.07 per share) for the 2000 third quarter.
For the 2001 nine month period, the Company generated net income of approximately $1.6 million ($.35 per share), versus a net loss of approximately $.5 million ($.14 per share) in the prior year nine month period. Included in results was income from discontinued operations of approximately $3.1 million in the 2001 nine month period and $1.1 million in the 2000 nine month period. As previously reported, the Company generated a gain of approximately $2.7 million on the sale of the Company's lottery business during the 2001 nine month period. The net loss from continuing operations was approximately $1.5 million in the 2001 nine month period, versus $1.6 million in the 2000 nine month period.
Primarily as a result of the sale of the Company's lottery business, the Company increased its cash and cash equivalents to approximately $6.7 million at September 30, 2001 from $139 thousand at December 31, 2000. These funds have primarily been 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 2001, as the result of the sale of our lottery business on June 1, 2001, we began to restructure existing operations in order to prepare for the redeployment of the Company's card dispensing equipment and to prepare for a potential merger or acquisition in order to accelerate our launch into a new market opportunity. The sale of our lottery business was the first major step in the Company's transformation process and the entry into a new market opportunity will be our second major step.
"The arrangement for the sale of our lottery business not only provides us the liquidity and up front cash we require to proceed with our strategic initiatives; it provides us opportunities for continuing revenue streams from those assets. In addition to the approximate $13 million we received upon closing, the arrangement provides up to $15 million in deferred and earn-out payments over the next five years if our contractual agreements and technologies that were transferred generate additional profits. In addition, we have entered into a separate on-line technology agreement to market a proprietary design for the world's first on-line activated instant lottery ticket. We continue to retain certain gross profit and royalty rights to this intellectual property.
"We believe we are now well positioned to be able to enhance shareholder value. We are currently working on plans for the redeployment and sale of our existing non-lottery related products. If successful, these products could begin generating revenue this year. We also have been in negotiations on potential merger candidates and are extremely optimistic that we will be able to accelerate our entry into new market opportunities 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. We look forward to reporting our progress as we move forward with our plans."
About the Company
The Company has provided effective technologies for transaction automation since its formation in 1991. The Company 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. In June 2001, the Company sold its assets used in its existing lottery business, relating to the manufacture, sale, lease and service of instant lottery ticket vending machines. The Company 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 Reform 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, a limited number of customers, political and other uncertainties 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)
Three Months Ended September 30,
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2001 2000
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Revenues $ 218 $ 34
Income (loss) from
continuing operations $ (260)(A) $ 250(C)
Income (loss) from
discontinued operations - $ (7)
Net Income (loss) $ (260)(A) $ 243(C)
Earnings (loss) per share:
Continuing operations $ (.06) $ .07
Discontinued operations - -
Net income (loss) $ (.06) $ .07
Nine Months Ended September 30,
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2001 2000
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Revenues $ 272 $ 48
Loss from continuing
operations $ (1,511)(A) $ (1,595)(D)
Income from discontinued
operations $ 3,142(B) $ 1,123
Net Income (loss) $ 1,631(A)(B) $ (472)(D)
Earnings (loss) per share:
Continuing operations $ (.33) $ (.46)
Discontinued operations .68 .32
Net income (loss) $ .35 $ (.14)
(A) Includes restructuring costs of $144
(B) Includes gain on sale of discontinued operations of $2,744
(C) Includes merger termination income of $855
(D) Includes merger termination income of $406