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There is a new BLOG posting
up on the ZAPZ interview with Steve Schneider, and later today I
will put up a new BLOG posting on today's edition on GEPT.
Please feel free to keep the comments and questions coming on either or
both companies. I'd like people to get both sides. Questions are probably
on the minds of many.
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Check back frequently for updates particularly when stocks are moving to
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Global ePoint
(NASDAQ: GEPT): Sets Stage For Rapid Growth |
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As several subscribers noted in comments
in the BLOG, GEPT has been showing signs of life of late,
and news which came out today before the open may help explain the renewed
enthusiasm for the stock. GEPT has begun a low volume rebound phase
which has taken the stock from the 4/18 low of $2.05 where it traded
for a nano second to the current $3.10 at last night's close. Higher
volumes may be imminent after today's news.
Before the market opened today,
GEPT announced it had entered into an agreement to purchase Astrophysics,
Inc., a leading developer and manufacturer of x-ray scanning security
systems.
GEPT will pay $10 million
in cash and give up 50.1% of GEPT in return for Astrophysics.
This will make the shareholders of Astrophysics controlling shareholders
of GEPT.
The worldwide market for xray and
scanning technologies is estimated to be in the billions. US airports have
been quick to adopt the new technologies, but many followers of the Homeland
Security market recognize that only a small percentage of cargo in US ports
is ever examined or scanned. Huge growth potential exists both domestically
and internationally. Mixed with GEPT's current digital cockpit surveillance
technology, this make for a very synergistic acquisition.
According to the press release, Astrophysics
has developed some of the best technology in this arena. Astrophysics
has been marketing products for over two years, and has hundreds of installations
worldwide. You can view an international map of their installation sites
by clicking
here. Furthermore, the press release goes on to state that in the past,
Astrophysics’
founder, Francois Zayek performed numerous research and development projects
that received multi-million dollar funding from the FAA and the DOD relating
to X-ray imaging and detection.
Once this acquisition is completed,
GEPT
will be competing directly with the two biggest players in this industry:
Invision
and OSI Systems (NASDAQ: OSIS). Invision was bought out by
GE in 2004 for $900 million. OSIS currently owns a $250 million
market valuation vs GEPT's current valuation of $38 million,
suggesting there is substantial upside in GEPT.
GEPT currently sports the
best looking chart I have seen in quite some time. I'm fairly comfortable
suggesting GEPT might be good for a short term trade. This is the
first time I have suggested anything for a short term trade since the April
2nd edition where I advised all traders to sell all positions in small
and micros.
The 25x5 displaced moving average
you see depicted in blue is far more complex than a simple moving average,
and a better leading indicator. This one is tough to break above, and GEPT
has done it convincingly.
Furthermore, the MACD has turned
up nicely, which is the indicator we use to identify if and when a stock
is moving into strong hands.
Adding further credibility to the
upside story is the recent financings. GEPT has raised a total of
$5 million recently through a 6% convertible preferred with a $2.80 conversion
price. This financing was done at about the current market price. Fund
managers are not right all the time, but I know this one is looking for
much better returns than 6%. This suggests sophisticated money believes
there is substantial upside in this stock from the $2.80 level.
GEPT was very good to OTC
Journal subscribers back in December. Two weeks after first publishing
on the company (Nov
29, 2004) at $2.31, the stock eclipsed the $6 mark at
gave us a 190% return. I digress. Those were better times in the
Homeland Security sector.
Like a stray cat who's been fed,
I am back to beg for another meal where I had success in the past. This
is not the same market as December, but it is improving considerably, and
oversold stocks are beginning to show signs of life.
Money will eventually flow back into
the Homeland Security sector, and GEPT has as good a chance as any
of returning to its old highs in the $6 range. Short term (one week), too
tough to call, but $4 might not be unrealistic if the market likes
today's news. Longer (six months), look for the stock to make an effort
for the old highs if market conditions continue to improve.
Here is the complete text of today's
release for your review:
| Press Release Source:
Global ePoint, Inc.
Global ePoint to Acquire
Leading Manufacturer of X-Ray Scanning Systems
Friday June 3, 9:03 am
ET
Acquisition of Astrophysics, Inc.
Will Expand Portfolio of State-of-the-Art Security Solutions
CITY OF INDUSTRY, Calif.--(BUSINESS
WIRE)--June 3, 2005--Global ePoint, (NASDAQ: GEPT - News), a leading manufacturer
of security technologies for the aviation, military, law enforcement, industrial
and commercial markets, announced today that it has entered into a non-binding
letter of intent to acquire Astrophysics, Inc.(www.astrophysicsinc.com),
a leading developer and manufacturer of x-ray scanning security systems.
The deal will enable the company to enter the multi billion dollar X-ray
security market. The acquisition is subject to customary closing conditions,
including satisfactory financing and shareholder approval. Global ePoint
expects to finalize the definitive agreement within the next 30 days. The
acquisition is expected to be completed in the third quarter.
Under the terms of letter
of intent, Astrophysics will receive $10 million in cash and 50.1% of the
outstanding Global ePoint common stock and options. Astrophysics has proprietary
x-ray scanning technology that can be used for baggage inspection, scanning
of air cargo and sea containers to detect explosives and other hazardous
materials. Astrophysics introduced its technologically advanced detection
systems to the market over two years ago. It has since achieved worldwide
acceptance and continuously increases their customer base. Astrophysics
has hundreds of installations in numerous countries worldwide.
Astrophysics is developing
the next generation of x-ray security detection systems and is working
closely with the US Transportation Security Administration to meet anticipated
new and more stringent detection requirements for Homeland Defense. In
the past, Astrophysics' founder, Francois Zayek performed numerous research
and development projects that received multi-million dollar funding from
the FAA and the DOD relating to X-ray imaging and detection.
"The acquisition of Astrophysics
marks the next step in our strategy to become a leading security technology
company," said Global ePoint CEO, Toresa Lou. "We are excited to add to
our capabilities, not only through Astrophysics' strong backlog of existing
business but also the technology prowess of Astrophysics' founder, Francios
Zayek, who is widely respected in the industry. Global ePoint's proven
design, manufacturing and marketing expertise combined with Astrophysics'
technology will create powerful synergies among our respective customer
bases."
"We are excited to join
the Global ePoint team," said Mr. Zayek. "In just a short period of time,
the company has built a solid base of customers in the digital video security
marketplace particularly in the airline industry. We expect that there
will be significant opportunities to market our technology to their customer
base, and that many of our customers could deploy Global ePoint's digital
video security solutions . We look forward to working with the Global ePoint
team to further penetrate this rapidly growing market."
The security market is
one of the fastest growing areas of the US economy today. Due to the events
of September 11th, 2001, the US Government has increased security spending
to secure the ports, borders, and airports on US soil through the Department
of Homeland Defense. One of the major issues facing the country's homeland
defense has been cargo container screening. There are over 200 million
cargo containers transported between major seaports around the globe and
over 16 million of those containers enter the U.S. Another 118 million
passenger vehicles cross the US border annually.
X-ray surveillance technologies
and products from companies like Astrophysics are a major weapon for Homeland
Security.
Astrophysics delivers
turnkey x-ray inspection systems to customers worldwide for use at airports,
government buildings, customs, banks, courthouses, hospitals, prisons and
many other locations. Astrophysics' technology teams have developed leading
proprietary products in baggage and cargo inspection.
Global ePoint designs,
manufactures and markets security products and systems for the aviation,
military, law enforcement and industrial markets. It's contract manufacturing
abilities not only provide a cost-advantage in the production of leading
security technology products but also a steady stream of reliable revenue
to help fund its expansion in to high growth, high technology markets related
to security. It's vertical integration allows it to maintain superior operating
efficiencies and to provide cost-advantaged products. For more information
please see www.globalepoint.com .
Subject to the completion
of definitive agreements to acquire Astrophysics, the Global ePoint intends
to file with the Securities and Exchange Commission a proxy statement,
and other relevant documents in connection with the proposed acquisition.
Investors and security holders are advised to read the proxy statement
regarding the proposed acquisition, if and when available, because it will
contain important information. Investors and security holders may obtain
a free copy of the proxy statement, if and when available, and other documents
filed by the company at the Securities and Exchange Commission's web site
at www.sec.gov. The proxy statement and such other documents may be obtained,
if and when available, from the company by directing such request to Global
ePoint, Inc. 339 S. Cheryl Lane, City of Industry, California 91789, Attention:
Investor Relations. A description of any interests that any of Global ePoint's
directors and executive officers have in the proposed acquisition is included
in a Current Report on Form 8-K filed with the SEC on June 3, 2005 and
will be available in the proxy statement.
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, the risk that Astrophysics transaction may not be completed in 2005,
or at all; risks related to the inability to obtain, or meet conditions
to the consummation of the transaction, including approval by stockholders
of Global ePoint; risks related to any uncertainty surrounding the transaction,
and the costs related to the transaction; risks related to the integration
of Global ePoint's recently acquired operations; market acceptance of Global
ePoint '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 Global ePoint '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.
Contact:
Global ePoint, Inc.
Toresa Lou, 909-869-1688
tlou@globalepoint.com
or
CEOcast, Inc. for Global ePoint
Ed Lewis, 212-732-4300
elewis@ceocast.com
Source: Global ePoint,
Inc. |
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