SAN MARCOS, Calif., Nov. 14, 2002 (PRIMEZONE) -- Global ePoint, Inc. (the "Company") (Nasdaq: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 the 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
September 30,
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