SAN MARCOS, Calif., Aug. 14, 2001 (PRIMEZONE) -- GLOBAL EPOINT, INC. (Formerly On Point Technology Systems, Inc.) (the Company) (Nasdaq:GEPT) today reported on results of operations for the second quarter and six months ended June 30, 2001.
As previously announced, 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 on June 1, 2001. As a result of the sale, the operations related to the lottery assets have been reflected as discontinued operations on the Company's financial statements.
For the 2001 second quarter, the Company generated net income of approximately $2.2 million ($.47 per share), versus a net loss of approximately $.6 million ($.18 per share) for the 2000 second quarter. The 2001 second quarter results include a gain of $2.7 million on the sale of the Company's lottery business. The net income, including the gain on sale, from discontinued operations was approximately $2.8 million in the 2001 second quarter, versus $.6 million in the 2000 second quarter. The net loss from continuing operations was approximately $.7 million in the 2001 second quarter, versus $1.3 million in the 2000 second quarter.
For the 2001 six month period, the Company generated net income of approximately $1.9 million ($.42 per share), versus a net loss of approximately $.7 million ($.21 per share) in the 2000 six month period. The net income, including the gain on sale, from discontinued operations was approximately $3.1 million in the 2001 six month period, versus $1.1 million in the 2000 six month period. The net loss from continuing operations was approximately $1.2 million in the 2001 six month period, versus $1.8 million in the 2001 six month period.
Primarily as a result of the sale of the Company's lottery business, the Company increased its working capital to approximately $7 million and had cash and cash equivalents of approximately $7.9 million at June 30, 2001.
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 second quarter of 2001, we were able to complete the sale of our lottery business, the first major step in this transformation process.
"The arrangement for the sale of our lottery business not only provides us the liquidity and upfront 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.
"As a result of the sale, we are now well positioned to proceed with our strategic initiatives. 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 have also been reviewing opportunities that involve the operation of on-line lottery operations, and the development of electronic solutions to high-volume, cash-oriented transactions, such as prepaid telephony, bill payments, prepaid debt processes, consumer entertainment and public access mediums. However, it is our intention not to proceed with those opportunities until we have had a chance to review a variety of other new market opportunities. 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 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 obtain the rights to on-line and internet lotteries and its ability to generate income from such operations, dependence upon third-party vendors, a limited number of customers, political and other uncertainties related to customer purchases, 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 June 30,
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2001 2000
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Revenues $ 48 $ 12
Loss from continuing operations $ (662) $ (1,266)(B)
Income from discontinued operations $ 2,848(A) $ 641
Net Income (loss) $ 2,186(A) $ (625)(B)
Six Months Ended June 30,
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2001 2000
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Revenues $ 54 $ 14
Loss from continuing operations $ (1,251) $ (1,845)(B)
Income from discontinued operations $ 3,142(A) $ 1,130
Net Income (loss) $ 1,891(A) $ (715)(B)
(A) Includes gain on sale of discontinued operations of $2,744
(B) Includes merger termination costs of $449