SAN MARCOS, Calif., Aug. 15, 2002 (PRIMEZONE) -- Global ePoint, Inc. (the "Company") (Nasdaq:GEPT) today reported on results of operations for the second quarter and six months ended June 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.
During the second quarter of 2002, the Company continued its efforts to strategically transition into new market opportunities. As part of these efforts, in July 2002, the Company commenced initial operations of its telephony subsidiary. The results of those operations will begin to be shown in the 2002 third quarter. Full operations of the subsidiary are not expected to commence until the 2002 fourth quarter. Also during the second quarter, the Company terminated certain international projects due to the social-political environment in the countries in which the Company was attempting to do business. The Company now intends to focus primarily on domestic opportunities although it will continue to review international opportunities on a case-by-case basis.
For the 2002 second quarter, the Company generated revenue from continuing operations of approximately $65 thousand, versus revenue of approximately $48 thousand in the prior year comparable period. Operating expenses for the 2002 second quarter were approximately $649 thousand, including restructuring costs of $118 thousand and costs of abandoned projects of $350 thousand, versus operating expenses of approximately $710 thousand for the prior year comparable quarter. As a result, the Company reported a loss from continuing operations of $584 thousand ($.13 per share) for the 2002 second quarter, versus a loss from continuing operations of $662 thousand ($.14 per share) for the prior year comparable quarter. Without restructuring and abandoned project costs, the 2002 second quarter operating expenses and loss from continuing operations would have been $181 thousand and $116 thousand, respectively.
For the 2002 six-month period, the Company generated revenue from continuing operations of approximately $151 thousand, versus revenue of approximately $54 thousand in the prior year comparable period. The increase was primarily from interest and investment income resulting from the increase in the Company's cash reserves and investments during that period. Operating expenses for the 2002 six-month period were approximately $1 million, including restructuring costs of $324 thousand and costs of abandoned projects of $350 thousand, versus operating expenses of approximately $1.3 million for the prior year comparable period. As a result, the Company reported a loss from continuing operations of $883 thousand ($.19 per share) for the 2002 six-month period, versus a loss from continuing operations of approximately $1.3 million ($.28 per share) for the prior year comparable period. Without restructuring and abandoned project costs, the 2002 six-month period operating expenses and loss from continuing operations would have been $360 thousand and $209 thousand, respectively.
The prior year three and six-month periods also included approximately $2.8 million ($.61 per share) and $3.1 million ($.70 per share), respectively, of gains from discontinued operations. The loss from continuing operations combined with the gain from discontinued operations resulting in net income of approximately $2.2 million ($.47 per share) and $1.9 million ($.42 per share) in the respective three and six-month periods ended June 30, 2001. The 2002 three and six-month periods did not have discontinued operations.
As of June 30, 2002, the Company maintained approximately $4.8 million in cash and cash equivalents and net tangible equity of approximately $8.5 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 second 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. 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 approximate $3.4 million of card dispensing equipment in the high-volume, cash-oriented prepaid telephony market. We anticipate the full launch of this new division by the fourth quarter of 2002. 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.
Selected Financial Information
(In thousands, except per share data)
(Thousand of dollars/shares,
except per share amounts) Three Months Ended June 30,
2002 2001
---------- ----------
Revenues $65 $48
Loss from continuing operations $(584)(A) $(662)
Income from discontinued operations -- $2,848
Net Income (loss) $(584)(A) $2,186
Earnings (loss) per share:
Continuing operations $(.13)(A) $(.14)
Discontinued operations -- $.61
Net income (loss) $(.13)(A) $.47
Six Months Ended June 30,
2002 2001
---------- ----------
Revenues $151 $54
Loss from continuing operations $(883)(B) $(1,251)
Income from discontinued operations -- $3,142
Net Income (loss) $(883)(B) $1,891
Earnings (loss) per share:
Continuing operations $(.19)(B) $(.28)
Discontinued operations -- $.70
Net income (loss) $(.19)(B) $.42
(A) Includes $468 of restructuring costs and
costs of abandoned projects
(B) Includes $674 of restructuring costs and
costs of abandoned projects