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CITY OF INDUSTRY, Calif. — Global ePoint, Inc. (NASDAQ: GEPT), a developer of innovative security solutions for the aviation, homeland security and law enforcement markets, today announced results for its 2004 fiscal year for the period ended December 31, 2004. The financial results include operations from the Company’s Digital Technology, Aviation and Contract Manufacturing operations.
Global ePoint reported revenue of $21.1 million for the period ended December 31, 2004, versus $21.4 million for fiscal 2003. The Company’s results were positively impacted by revenue generated from its Digital Technology and Aviation operations, which were offset by a decline in sales of consumer PCs in its Contract Manufacturing business.
The Company had revenue from the Aviation division of $2.8 million in fiscal year 2004, compared to no revenue from that operation in the fiscal 2003 period. Global ePoint had $1.3 million in revenue from its Digital Technology operation in fiscal 2004, compared to $88,000 in fiscal 2003. Contract Manufacturing declined from $21.3 million in fiscal 2003 to $17.0 million in fiscal 2004. The Company’s continued investment in research and development, integration and organization expenses related to our acquisitions, and the sales, marketing and infrastructure costs related to the recently launched Perpetual Digital product line resulted in a net loss of $5.0 million in fiscal 2004, compared to a net loss of $423,000 in the year–earlier period. After accounting for a preferred stock dividend of $1.7 million in 2004, Global ePoint had a net loss applicable to common stockholders of $6.7 million or $0.61 per share, compared to a net loss applicable to common stockholders of $423,000 or $0.05 per share for the same period in 2003.
"2004 represented a year of change, as we continued the transition of the Company from a low–margin contract manufacturer to a provider of high–margin, leading–edge security products through the acquisitions of AirWorks and Perpetual, two businesses we believe will generate substantial growth in the future. We also allocated significant resources to our research and development effort. We believe digital compression, internet protocol applications and database management applications are the keys to developing the secure network digital video technology that is expected to drive the development of our next generation of digital video security products." said Toresa Lou, Global ePoint’s chief executive officer. "Already, we have been awarded contracts for the Global AirWorks Cockpit Door Surveillance System from leading airlines such as Lufthansa. Our Digital Technology division has laid the foundation for rapid expansion by developing a wholesale distribution network for our newly launched Perpetual Digital product line. We believe that the Company is well positioned to capitalize on many of the emerging trends in security and law enforcement, and investors should see strong growth from these operations in the future."
Some of the recent highlights include:
Lufthansa Airlines ordered additional installations of the Cockpit Door Surveillance System (CDSS) manufactured by the company’s AirWorks Division for several aircraft in their fleet, as well as for Flight Training Simulators.
GE Capital Aviation Service, the world’s most experienced aircraft leasing company, ordered the Airworks Cockpit Door Surveillance System (CDSS) to be installed on eight AirBus A320 aircraft.
German–based European carrier GermanWings has ordered products for a new Airbus A320 and has also exercised an option calling for Global AirWorks to install its CDSS, in its entire fleet.
Swiss International ordered 24 video–based CDSS, for systems in its RJ–85 and RJ–100 commuter jets.
Digital Technology division launches new 4 and 8 channel mobile surveillance system and expands the Perpetual Digital product line featuring Network Digital Video Recording System including a central management system (CMS), Point–of–Sale/ATM Surveillance Application, a full line of wide dynamic and pan–tilt–zoom (PTZ) digital surveillance cameras.
Digital Technology division expands its North American distribution network.
"We will continue the investments required to develop our strategic initiatives in order to benefit from the expected growth in the aviation law enforcement, commercial and industrial security marketplace." said Ms. Lou. "Growing momentum in our AirWorks and Perpetual business lines should help the Company gain its share of this rapidly growing market. We are excited about prospects for the future."
GLOBAL EPOINT, INC. AND SUBSIDIARIES
(Formerly McDigit, Inc. and Best Logic, LLC)
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2004
(Thousands of dollars, except per share amounts) |
|
| Assets |
| ——————— |
| CURRENT ASSETS: |
|
|
| Cash and cash equivalents |
$ |
937 |
| Accounts receivable, net |
2,925 |
| Accounts receivable - related parties |
5,359 |
| Inventory |
3,814 |
| Other current assets |
358 |
|
——————— |
| Total current assets |
13,394 |
|
——————— |
|
| Property, plant and equipment, net |
870 |
| Card dispensing equipment and related parts |
885 |
| Goodwill |
6,328 |
| Other intangibles |
1,318 |
| Deposits and other assets |
720 |
|
——————— |
| Total other assets |
10,121 |
|
——————— |
| Total assets |
$ |
23,515 |
|
========= |
|
| Liabilities and Stockholders’ equity |
| ————————————————————— |
| Current Liabilities: |
| Accounts payable |
$ |
2,347 |
| Accounts payable - related parties |
|
7,117 |
| Accrued expenses |
|
672 |
| Customer deposits |
|
125 |
| Due to related parties |
|
927 |
| Due to stockholder |
|
145 |
|
——————— |
| Total current liabilities |
|
11,334 |
|
——————— |
|
| STOCKHOLDERS' EQUITY: |
|
Preferred stock, no par value, 2,000,000 shares authorized, 55,000 shares issued, 34,000 shares outstanding, with an aggregate liquidation preference $3,400,000 |
2,672 |
|
Common stock, $.03 par value, 50,000,000 shares authorized and 12,122,552 shares issued and outstanding |
363 |
|
Paid-in capital |
12,635 |
|
Accumulated deficit |
(4,517) |
|
——————— |
|
Total stockholders’ equity |
11,153 |
|
——————— |
| Total liabilities and stockholders’ equity |
$ |
23,515 |
|
========= |
GLOBAL EPOINT, INC. AND SUBSIDIARIES
(Formerly McDigit, Inc. and Best Logic, LLC)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 and 2003
|
| (Thousands of dollars, except per share amounts) |
|
For the three months ended |
|
|
——————————— |
|
|
Dec. 31, 2004 |
|
Dec. 31, 2003 |
|
|
————— |
|
————— |
| Net sales |
|
$ |
21,076 |
|
$ |
21,393 |
| Cost of sales |
|
16,530 |
|
17,191 |
|
|
————— |
|
————— |
| Gross profit |
|
4,546 |
|
4,202 |
|
|
————— |
|
————— |
| Operating Expens es: |
|
|
|
|
| Selling and marketing |
|
2,639 |
|
1,343 |
| General and administrative |
|
5,831 |
|
,2104 |
| Research and development |
|
1,009 |
|
1,369 |
| Depreciation and amortization |
|
184 |
|
66 |
|
|
————— |
|
————— |
| Total operating expenses |
|
9,663 |
|
4,882 |
|
|
————— |
|
————— |
| Loss from operations |
|
(5,117) |
|
(680) |
| Other income (expense) |
|
104 |
|
257 |
|
|
————— |
|
————— |
| Loss before income tax provision |
|
(5,013) |
|
(423) |
| Income tax provision |
|
- |
|
- |
|
|
————— |
|
————— |
| Net Loss |
|
(5,013) |
|
(423) |
| Preferred stock dividend |
|
(1,706) |
|
- |
|
|
————— |
|
————— |
| Net Loss applicable to common stockholders |
|
$ |
(6,719) |
|
$ |
(423) |
|
|
===== |
|
===== |
| Loss per share - basic |
|
$ |
(0.61) |
|
$ |
(0.05) |
|
|
===== |
|
===== |
| Loss per share- fully diluted |
|
$ |
(0.61) |
|
$ |
(0.05) |
|
|
===== |
|
===== |
| Weighted average shares and share equivalents |
|
|
10,927 |
|
|
7,848 |
|
|
===== |
|
===== |
|
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Global ePoint’s growth catalyst, through its wholly-owned subsidiaries, is the design, manufacturing, sales and distribution of digital video surveillance systems for the law enforcement, military, aviation and homeland security markets. On the cutting edge of digital technology and seeking to expand its product line, Global ePoint is developing new compression technologies and next–generation, secure network digital video systems and servers for a wide range of new markets, concentrating primarily on security and homeland defense applications. As a solid recurring revenue stream, the Company also manufactures customized computing systems for industrial, business and consumer markets, as well as other specialized electronic products and systems. Complete vertical integration — from design and manufacturing to sales and distribution — allows the Company to capture efficiencies and maintain cost advantages in these growing markets, particularly homeland security. For more information, please visit www.globalepoint.com.
This news release contains forward–looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward–looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to the integration of the Company’s recently acquired operations; market acceptance of the Company’s products; delays in the introduction of new products; production and/or quality control problems; further approvals of regulatory authorities and the denial, suspension or revocation of certifications and licenses by governmental authorities; and the Company’s ability to obtain capital as and when needed. For a discussion of these and other factors which may cause actual events or results to differ from those projected, please refer to the Company’s most recent annual report on Form 10–KSB and quarterly reports on Form 10–QSB, as well as other subsequent filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to update or revise such statements to reflect new circumstances or unanticipated events as they occur. |
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