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**U.S. SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

**FORM 10-QSB**

 

| ý                                            | **QUARTERLY REPORT  UNDER SECTION 13 OR 15(d)  OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                              |                                                                                          |
| **For  the quarterly period ended June 30, 2001** |
|                                              |
| **OR**                                            |
|                                              |
| o                                                 | **TRANSITION REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**       |

**Commission file number 0-21738**

**GLOBALEPOINT, INC.**(formerly On-Point Technology Systems, Inc.(Name of small business issuer in its charter)

| **Nevada**                                                                     | **33-0423037**      |
|--------------------------------------------------------------------------------|---------------------|
| (State or other  jurisdiction of                                               | (I.R.S. Employer    |
| incorporation or  organization)                                                | Identification No.) |
|                                                                           |                |
| **1370  W. SAN MARCOS BLVD. SUITE 100, SAN MARCOS, CALIFORNIA 92069**          |
| (Address of principal executive  offices)                                      | (Zip Code)          |
|                                                                           |                |
| Issuer’s telephone  number, including area code:  **(760) 510-4900** |

Check whether the issuer (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Act duringthe preceding twelve months, and (2) has been subject to such filingrequirements for the past 90 days.  Yes xNo_

Asof August 1,2001, there were 4,305,584 shares of Common Stock ($.03 parvalue) outstanding.

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**INDEX**

| Part I. Financial Information |     |
|-------------------------------|----------|
|                          |     |   |   |
|                          | Item  1. | Financial  Statements |   |
|                          |     |   |   |
|                          |     | Condensed Consolidated  Balance Sheet June 30, 2001 (Unaudited) |   |
|                          |     |   |   |
|                          |     | Condensed  Consolidated Statements of Operations (Unaudited) Three and Six Months Ended  June  30,  2001 and 2000 |   |
|                          |     |   |   |
|                          |     | Condensed  Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30,  2001  and 2000 |   |
|                          |     |   |   |
|                          |     | Notes  to Condensed Consolidated Financial Statements (Unaudited) |   |
|                          |     |   |   |
|                          | Item  2. | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|                          |     |   |   |
| Part II. Other Information    |     |

*** ***

***Global ePoint, Inc. and SubsidiariesCondensed Consolidated Balance Sheet****(Unaudited)*

| Assets                             (***Thousands of dollars, except share  amounts)*** | June  30 2001                                                                                        |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                    |
| Current assets:                                                                                                                                                                                                                    |                                                                                                 |   |
|                                                                                                                                                                                                                               | Cash and cash  equivalents                                                                           | $      | 7,907 |   |
|                                                                                                                                                                                                                               | Accounts receivable,  net                                                                            | 294    |   |
|                                                                                                                                                                                                                               | Inventories                                                                                          | 2,162  |   |
|                                                                                                                                                                                                                               | Other current assets                                                                                 | 59     |   |
|                                                                                                                                                                                                                                    |
| Total current assets                                                                                                                                                                                                               | 10,422                                                                                               |   |
|                                                                                                                                                                                                                                    |
| Plant, property and  equipment, net                                                                                                                                                                                                | 150                                                                                                  |   |
| Property held for  operating leases, net                                                                                                                                                                                           | 79                                                                                                   |   |
| Inventory previously  under lease                                                                                                                                                                                                  | 1,429                                                                                                |   |
| Other assets                                                                                                                                                                                                                       | 1,376                                                                                                |   |
|                                                                                                                                                                                                                                    |
| Total assets                                                                                                                                                                                                                       | $                                                                                                    | 13,456 |   |
|                                                                                                                                                                                                                                    |
| Liabilities and  shareholders’ equity                                                                                                                                                                                         |                                                                                                 |   |
|                                                                                                                                                                                                                                    |
| Current liabilities:                                                                                                                                                                                                               |                                                                                                 |   |
|                                                                                                                                                                                                                               | Accounts payable                                                                                     | $      | 1,220 |   |
|                                                                                                                                                                                                                               | Notes payable                                                                                        | 955    |   |
|                                                                                                                                                                                                                               | Accrued expenses and  other liabilities                                                              | 1,283  |   |
|                                                                                                                                                                                                                                    |
| Total current  liabilities                                                                                                                                                                                                         | 3,458                                                                                                |   |
|                                                                                                                                                                                                                                    |
| Shareholders’ equity:                                                                                                                                                                                                         |                                                                                                 |   |
|                                                                                                                                                                                                                               | Preferred stock, no  par value, 2,000,000 shares authorized, no shares issued or outstanding         |   |   |
|                                                                                                                                                                                                                               | Common stock, $.03 par  value, 13,333,334 shares authorized, 4,305,584 shares issued and outstanding | 129    |   |
|                                                                                                                                                                                                                               | Shares to be issued                                                                                  | 950    |   |
| Additional paid-in  capital                                                                                                                                                                                                        | 33,125                                                                                               |   |
| Accumulated deficit                                                                                                                                                                                                                | (24,206                                                                                              | )      |
|                                                                                                                                                                                                                                    |
| Total shareholders’  equity                                                                                                                                                                                                   | 9,998                                                                                                |   |
|                                                                                                                                                                                                                                    |
| Total liabilities and  shareholders’ equity                                                                                                                                                                                   | $                                                                                                    | 13,456 |   |
|                                                                                                                                                                                                                                    |

* *

*See accompanying notes to condensed consolidated financialstatements*

***Global ePoint, Inc. and SubsidiariesCondensed ConsolidatedStatements of Operations(Unaudited)***

|                                                           | Six  Months Ended  June 30           |   | Three  Months Ended  June 30 |   |
|----------------------------------------------------------------|--------------------------------------|--------|------------------------------|--------|
| ***(Thousands of dollars/shares, except per  share amounts)*** | 2001                                 |   | 2000                         |   | 2001 |   | 2000 |   |
|                                                                |
| Revenues:                                                      |                                 |   |                         |   |   |   |   |   |
|                                                           | Sales                                | $      | 10                           |   | $ | 14 |   | $ | 4 |   | $ | 12 |   |
|                                                           | Interest                             | 44     |                         |   |   | 44 |   |   |   |
|                                                                |
| Total Revenues                                                 | 54                                   |   | 14                           |   | 48 |   | 12 |   |
|                                                                |
| Operating expenses:                                            |                                 |   |                         |   |   |   |   |   |
|                                                           | Cost of sales                        | 5      |                         | 7      |   | 2 |   | 6 |   |
|                                                           | Selling, general and  administrative | 1,034  |                         | 1,025  |   | 596 |   | 618 |   |
|                                                           | Interest expense                     | 266    |                         | 378    |   | 112 |   | 205 |   |
|                                                           | Merger termination  costs            |   |                         | 449    |   |   |   | 449 |   |
|                                                                |
| Total operating  expenses                                      | 1,305                                |   | 1,859                        |   | 710 |   | 1,278 |   |
|                                                                |
| Loss from continuing  operations                               | (1,251                               | )      | (1,845                       | )      | (662 | ) | (1,266 | ) |
|                                                                |
| Discontinued  operations:                                      |                                 |   |                         |   |   |   |   |   |
|                                                           | Income                               | 398    |                         | 1,130  |   | 104 |   | 641 |   |
|                                                           | Gain on sale                         | 2,744  |                         |   |   | 2,744 |   |   |   |
|                                                                |
| Income from  discontinued operations                           | 3,142                                |   | 1,130                        |   | 2,848 |   | 641 |   |
|                                                                |
| Net Income (loss)                                              | $                                    | 1,891  |                         | $      | (715 | ) | $ | 2,186 |   | $ | (625 | ) |
|                                                                |
|                                                           |                                 |   |                         |   |   |   |   |   |
| Earnings (loss) per  share – Basic and Diluted:           |                                 |   |                         |   |   |   |   |   |
|                                                           | Loss from continuing  operations     | $      | (.28                         | )      | $ | (.54 | ) | $ | (.14 | ) | $ | (.37 | ) |
|                                                           | Income from  discontinued operations | .70    |                         | .33    |   | .61 |   | .19 |   |
|                                                                |
|                                                           | Net income (loss)                    | $      | .42                          |   | $ | (.21 | ) | $ | .47 |   | $ | (.18 | ) |
|                                                                |
|                                                           |                                 |   |                         |   |   |   |   |   |
| Weighted average  shares                                       | 4,463                                |   | 3,447                        |   | 4,622 |   | 3,472 |   |
|                                                                |

* *

*See accompanying notes tocondensed consolidated financial statements
***Global ePoint, Inc. and Subsidiaries******Condensed Consolidated Statements of CashFlow******s****(Unaudited)*
 Six  months ended June 30  *(Thousands  of dollars)*2001 2000   Cash flows from  operating activities:      Loss from continuing  operations$(1,251)$(1,845)  Income from  discontinued operations398 1,130   Adjustments to  reconcile income (loss) to net cash used for operating activities:      Depreciation and  amortization357 624   Issuance of options  and warrants for services provided52 30   Other non-cash charges` 100   Changes in assets and  liabilities:      Accounts receivable106 (1,005)  Inventories418 (891)  Accounts payable(333)589   Accrued expenses and  other liabilities(299)(502)  Other current assets(52)(135)  Net cash used for  operating activities(604)(1,905)  Cash flows from  investing activities:      Purchases of plant,  property and equipment(25)    Net investment in  sales-type leases710 (644)  Decrease in other  assets77     Net proceeds from sale  of discontinued operations, including gain of $2,74412,665     Investment in  short-term financial instruments(244)    Net cash provided by  (used for) investing activities13,183 (644)  Cash flows from  financing activities:      Proceeds from exercise  of stock warrants and options  270   Proceeds from  (repayments of) line of credit, net(3,786)605   Proceeds from  (repayments of) notes payable, net(1,025)1,580   Net cash provided by  (used for) financing activities(4,811)2,455   Increase (decrease) in  cash and cash equivalents7,768 (94)  Cash and cash  equivalents at beginning of period139 157   Cash and cash  equivalents at end of period$7,907 $63  Supplemental cash flow  information, cash paid during the period for interest$266 $247   
*See accompanying notes to condensed consolidated financial statements*
* 

**GLOBAL EPOINT, INC. AND SUBSIDIARIES**

**NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS******(Unaudited)

1.          ***Basis of Presentation  ***The accounting and reportingpolicies of Global ePoint, Inc. (formerly On-Point Technology Systems, Inc.) andsubsidiaries (collectively referred to as the “Company”) conform to generallyaccepted accounting principles.  Thecondensed consolidated financial statements for the three and six months endedJune 30, 2001 and 2000 are unaudited and do not include all information orfootnotes necessary for a complete presentation of financial condition, resultsof operations and cash flows.  Theinterim financial statements include all adjustments, consisting only of normalrecurring accruals, which in the opinion of management are necessary in orderto make the financial statements not misleading.  These consolidated financial statements should be read inconjunction with the Company’s December 31, 2000 audited financial statements,which are included in the Company’s Annual Report on Form 10-KSB/A for theperiod ended December 31, 2000.  Theresults of operations for the six months ended June 30, 2001 are notnecessarily indicative of the results to be expected for the entire year endingDecember 31, 2001.

             OnNovember 6, 2000, the Board of Directors of the Company approved aone-for-three reverse split of the Company’s common stock.  No fractional shares of common stock wereissued in connection with the reverse stock split and in instances where thereverse split resulted in a stockholder becoming the holder of a fractionalinterest in a share, then the number of shares held by such stockholder wasrounded up to the nearest whole share. The accompanying condensed consolidated financial statements for thethree and six months ended June 30, 2000 have been restated to show the effectsof the reverse stock split as if the split had occurred as of the beginning ofthe respective periods.

             InJune 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No.’s141 and 142, “Business Combinations” and “Goodwill and Other Intangibles”.  FASB 141 requires all business combinationsinitiated after June 30, 2001 to be accounted for using the purchase method.  Under FASB 142, goodwill is no longersubject to amortization over its estimated useful life.  Rather, goodwill is subject to at least anannual assessment for impairment applying a fair-value based test.  Additionally, an acquired intangible assetshould be separately recognized if the benefit of the intangible asset isobtained through contractual or other legal rights, or if the intangible assetcan be sold, transferred, licensed, rented, or exchanged, regardless of theacquirer’s intent to do so.  The Companyis in the process of determining the impact of these pronouncements on itsfinancial position and results of operations.

2***.***          ***Discontinued Operations  ***On June 1, 2001, the Companysold to Interlott Technologies, Inc. (“Interlott”) those assets used in itsexisting lottery business, relating to the manufacture, sale, lease and serviceof instant ticket vending machines, including the assignment of the Company’sexisting lottery contracts pursuant to a definitive agreement executed onFebruary 23, 2001 (the “Agreement”).  Pursuantto the Agreement, the Company received approximately $13.1 million at closingwhich, after sale related costs of approximately $400 thousand, generated netproceeds of approximately $12.7 million. In addition, the Company accrued approximately $1.1 million forestimated residual costs of disposal and estimated subsequent purchase priceadjustments.  The components of the gainon the sale were as follows:
 *(In  thousands)* **Proceeds, net of  related costs and accruals$11,600 Net book value of  assets sold8,856 Gain on sale$2,744 
             TheAgreement also provides for up to $9 million of deferred payments (subject tothe performance of certain contracts assigned to Interlott) over five years andearn-out payments of up to $6 million (subject to certain conditions) over fiveyears.  These payments have not beenaccrued as a receivable but rather will be recorded as income when all theconditions for payment have been met. In addition, the Company and Interlott entered into a separate on-linetechnology agreement to market a proprietary design for an on-line activatedinstant lottery ticket.

             Asa result of the sale, the operations related to the lottery assets have beenreflected as discontinued operations in the accompanying condensed consolidatedfinancial statements.  The results ofdiscontinued operations for the three months and six months ended June 30, 2001and 2000 were as follows:
 Six  Months Ended  June 30 Three  Months Ended  June 30 *(in thousands)*2001 2000 2001 2000 Net sales$2,944 $6,670 $1,566 $3,842 Gross profit610 1,906 215 994 Operating expenses212 776 111 353 Net income from  discontinued operations$398 $1,130 $104 $641 
             Forthe six months ended June 30, 2001, cash flows provided by operating and investingactivities were $1,920 thousand and $667 thousand, respectively, totaling$2,587 thousand.  For the six monthsended June 30, 2000, cash flows used for operating activities were $740thousand and cash flows provided by investing activities were $1,084 thousand,netting cash of $344 thousand.

 

             Thenet assets of discontinued operations that were disposed as of June 1, 2001were as follows:
             *(In  thousands)* **Current assets$4,391 Plant, property and  equipment, net112 Net investment in  sales-type leases2,652 Property under  operating leases, net518 Other assets1,183 Net assets of  discontinued operations$8,856 
3.          ***Contingencies  ***On April 20, 2000, ashareholder class action was filed against the Company and certain officers anddirectors in the U.S. District Court, Southern District of California.  The action, which seeks an unspecifiedamount of damages on behalf of all similarly situated shareholders, allegesthat the Company violated federal securities laws by the dissemination ofmaterially false and misleading financial statements.  Subsequent cases alleging substantially the same claims, and alsofiled in the same court, have all been consolidated before the same judge.  The Company and the officers and directorshave entered into amended settlement agreements with the class, and the courthas preliminarily approved the amended settlement agreements.  The Company and the other defendants havedenied the liability claims as part of the amended settlements, but believethat settling the cases quickly is in the best interests of the Company inorder for management to more effectively proceed with its strategic businessplans.  Under the settlement agreement,the Company would be permitted to issue shares equal to $950 thousand in valueon the date the shares are required to be issued to the class, which isestimated would occur within twelve months, and $50 thousand of cash.  The affect of the settlement has alreadybeen accrued in the Company’s financial statements.

             OnApril 21, 2000, an action was filed against the Company in U.S. District Court,Southern District of Ohio, by Interlott. The action alleged that the Company breached a Settlement Agreement andMutual Release dated May 30, 1991 with Interlott in that the Company was usingelements of Interlott’s technology in the Company’s new PlayPointtechnology.  As a result of the sale ofthe Company’s lottery assets to Interlott, the case has been dismissed.

4.          ***Provisions for Income Taxes***   No provisions or benefits for federal orstate income taxes have been made for the six month period ended June 30, 2001and 2000.  As of December 31, 2000, theCompany had approximately $18.3 million of net operating loss available tooffset future income.  (See Note 8 ofNotes to Consolidated Financial Statements in On-Point’s Form 10-KSB for theyear ended December 31, 2000).

5.          ***Per Share Information***   In February 1997, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards (“SFAS”) No.128 “Earnings per Share” establishing standards for computing and presentingBasic Earnings Per Share (“Basic EPS”) and Diluted Earnings Per Share (“DilutedEPS”).  Basic EPS is computed on thebasis of the weighted average shares of common stock outstanding plus contingentlyissuable shares.  Diluted EPS iscomputed on the basis of weighted average shares outstanding plus contingentlyissuable shares and the additional common shares that would have beenoutstanding if dilutive potential common shares had been issued, using thetreasury stock method.  Included in thecomputation for Basic and Diluted EPS for the three months ended June 30, 2001are 316,666 shares, which are contingently issuable pursuant to the settlementagreements for the class action cases (see Note 3 herein).  For all the periods presented, options andwarrants were not factored into the calculation because they were antidilutiveor because the Company had a net loss. The Company had options and warrants outstanding of approximately 1.9million during 2001 and 1.1 million during 2000.

6.          ***Notes Payable***   As of June 30, 2001, notes payableconsisted of notes to certain private lenders in the amount of $205 thousand,including $130 thousand from the Company’s chief executive officer, all ofwhich mature on February 15, 2002 with interest-only payable quarterly at 10%per annum, and a note to GTECH Corporation in the amount of $750 thousand,which matures with interest at 10% per annum on February 15, 2002.

7.          ***Shareholders Equity***   The increase in shareholder’s equity fromapproximately $8.1 million at December 31, 2000 to approximately $10 million atJune 30, 2001 was substantially all the result of the net income ofapproximately $1.9 million for the six months ended June 30, 2001.

 
**ITEM 2.****MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**
             ***General  ***The Company is in the process of a majortransition.  The Company is undergoing aseries of actions intended to transform the Company and to strategically moveforward with new market opportunities that can better enhance shareholdervalue.  The Company has been engagedprimarily in the lottery industry over the past 10 years and was one of thelargest providers of vending terminals for the sale of instant-winner lotterytickets.  As part of this transformationprocess, on February 23, 2001, the Company executed a definitive agreement tosell to Interlott Technologies, Inc. (Interlott) the assets used in itsexisting lottery business, relating to the manufacture, sale, lease, andservice of instant lottery ticket vending machines in exchange for up to $28.5million, including cash of $13.5 million at closing (subject to closingadjustments), and deferred and earn-out amounts (subject to certain conditions)for the remainder.  A more detaileddescription of the agreement with Interlott is under “Agreement with Interlott”in the Company’s Annual Report on Form 10-KSB for the year ended December 31,2000.  Such sale, which was approved bythe Company’s shareholders on May 18, 2001, was completed on June 1, 2001.

             TheCompany’s revenues through June 30, 2001 had been generated from (i) sales ofvending terminals (ii) leases of vending terminals (iii) performance of serviceon vending terminals (iv) upgrades to vending terminals, and (v) sales ofassociated parts.  The Company’sproducts were sold or leased to a limited number of customers worldwide.  As a result, the Company had experiencedfluctuations in its financial results and capital expenditures because of thetiming of significant individual contract awards and customer orders as well asassociated product delivery schedules. The Company’s sales cycle could, at times, be relatively long due to thelead time required for business opportunities to result in signed sales or leaseagreements.  Operating results wereaffected by such lead time as well as working capital requirements associatedwith manufacturing vending terminals pursuant to new orders, increasedcompetition, and the extended time which may elapse between the customer’s firmorder and the receipt of revenue from the sale or lease of the applicablevending terminals.  In addition, therehad been an accelerating trend by customers to lease rather than purchasevending terminal equipment.  Leasingvending terminals required the Company to invest capital or otherwise financethe manufacture of the vending terminals.

             Overthe past four years, the Company had undergone an extensive development programin accordance with a comprehensive strategic product development plan for thelottery market.  The plan envisioned thedevelopment of a proprietary design for the world’s first central-computeractivated instant winner lottery ticket as well as the next generation ofdispensing equipment for instant winner lottery tickets capable of ultimatelydispensing the new ticket design.  Priorto the sale of its lottery assets, the Company had obtained a patent for itson-line instant ticket concepts and had finalized most of the development of itsnext generation lottery equipment.  TheCompany had expended over $5 million on its product development strategy.

             Asa result of the tremendous focus and resources required over the past fouryears for the development of its new next generation lottery products, resultsof operations were negatively impacted due to the expense of the developmentcosts and the transitional impact of changing products on the Company’s revenueand gross margins.  Since the lotterybusiness accounted for substantially all of the Company’s business in 2001 and2000, the discussions relating to the results of operations should be read inthis context.  As a result of the saleof the lottery business, the Company will no longer be engaged in the businessof manufacturing, selling, leasing and service of lottery vending machinessubsequent to June 1, 2001, the close of the transaction.

             TheCompany is now positioned to proceed with further actions designed to transformitself into a more diversified company. First, the Company is moving forward with marketing plans for theredeployment and sale of its existing non-lottery related products.  Second, it is reviewing a variety of newmarket opportunities that would provide it with the ability to jump over theinitial development phase generally required of a new product.  In that regard, management is currentlyreviewing the possibilities of merging with an established business and/oracquiring a developed product line.  TheCompany’s goal with respect to securing a new market opportunity is to identifywhich opportunities best leverage its management expertise, technologicalproperty, international relationships and corporate value, while maximizing itsabilities to enhance shareholder value. The Company anticipates that if a new business opportunity is completed,a significant restructuring of its operations would result.  The extent of the restructuring and theeffect on the Company’s financial statements will depend on the particularbusiness opportunity.

**Results of Operations**

***             Continuing Operations***   The Company had no significant revenue fromcontinuing operations in 2001 and 2000. Although the Company has non-lottery products, substantially all of itsfocus in those periods were on its lottery-related business.  Subsequent to the sale of the lottery assetson June 1, 2001, the Company has been reviewing and moving forward withstrategies to maximize value from its non-lottery related assets.  However, no assurances can be given as tothe success of these new strategies.

 

             Totaloperating expenses decreased in the 2001 periods primarily as the result of thenonrecurrence of $449 thousand of costs that were expensed in the 2000 secondquarter relating to the termination of a prior merger attempt.  Selling, general and administrative costsand expenses for the 2001 periods remained relatively constant with the 2000periods.  Interest expense for the 2001first quarter decreased over the prior year comparable quarter by $92 thousandprimarily due to the effect of decreased borrowings.

             Asa result of the above, for the three and six months ended June 30, 2001, theCompany incurred a net loss from continuing operations of $1,251 thousand and$662 thousand, respectively, versus $1,845 thousand and $1,266 thousand in therespective 2000 periods.

***             Discontinued Operations  ***Priorto the Company’s change in business strategy, the Company had been primarilyengaged in the lottery industry. *** ***The company’scustomer base in the lottery business remained relatively constant between the2001 year and 2000 year although income for the three and six month periodsended June 30, 2001 decreased from the prior year, primarily as a result ofdecreases in sales and sales-type leases of its existing lottery productline.  As previously discussed, theCompany was in the process of marketing its new next generation lotteryproducts and the decreases in sales partly relate to the transitioning requiredin the introduction of the new products. Further, because the lottery business was sold on June 1, 2001, thethree and six month periods for 2001 include revenue for only two and fivemonths, respectively, whereas, sales in 2000 were for the full periods.  The overall decrease in sales was due to thecombination of the above factors.

             Thedisposal of assets of the lottery operations are being accounted for asdiscontinued operations.  The results ofoperations are summarized as follows:
 Six  Months Ended  June 30 Three  Months Ended  June 30 **Results of Operations:**2001 2000 2001 2000 Net sales$2,944 $6,670 $1,566 $3,842 Gross profit610 1,906 215 994 Operating expenses212 776 111 353 Net Income$398 $1,130 $104 $641 
             Grossprofit, operating expenses and net income were all lower in the 2001 periods asthe result of lower sales during 2001 and for the shorter reporting period in2001.

             OnJune 1, 2001, the Company completed the sale of its lottery business and, as aresult, recognized a gain from the sale of approximately $2.7 million.

             Asa net result of the above, the Company reported net income of approximately$1.9 million for the six months ended June 30, 2001, versus a loss in the prioryear six months of approximately $.7 million and net income of approximately$2.2 million for the three months ended June 30, 2001, versus a loss in the prioryear three months of approximately $.6 million.

***             Liquidity and CapitalResources  ***Asa result of the proceeds generated by the sale of lottery assets, the Companyhas working capital of approximately $7 million and cash and cash equivalentsof approximately $7.9 million. Management believes the Company has sufficient liquidity to fund itsexisting operations and provide a basis for new business opportunities.

**PARTII.  OTHER INFORMATION**

**ITEM 1.**            **LEGAL PROCEEDINGS**

             OnApril 20, 2000, a shareholder class action was filed against On-Point andcertain officers and directors in the U.S. District Court, Southern District ofCalifornia.  The action, which seeks anunspecified amount of damages on behalf of all similarly situated shareholders,alleges that On-Point violated federal securities laws by the dissemination ofmaterially false and misleading financial statements.  Subsequent cases alleging substantially the same claims, and alsofiled in the same court, have all been consolidated before the same judge.  The defendants have entered into amendedsettlement agreements with the class, and the court has preliminarily approvedthe amended settlement agreements. On-Point and the other defendants have denied the liability claims aspart of the amended settlements, but believe that settling the cases quickly isin the best interests of the Company in order for management to moreeffectively proceed with its strategic business plans.  Under the settlement agreement, On-Pointwould be permitted to issue shares equal to $950 thousand in value on the datethe shares are required to be issued to the class, which is estimated wouldoccur within twelve months, and $50 thousand of cash.

             OnApril 21, 2000, an action was filed against the Company in U.S. District Court,Southern District of Ohio, by Interlott. The action alleged that the Company breached a Settlement Agreement andMutual Release dated May 30, 1991 with Interlott in that the Company was usingelements of Interlott’s technology in the Company’s new PlayPoint technology.  As a result of the sale of the Company’slottery assets to Interlott, the case has been dismissed.

**ITEM 2*.***            **CHANGES IN SECURITIES**
(a  )None(b)None(c)None
**ITEM 3.**            **DEFAULTS UPON SENIOR SECURITIES**

             None

**ITEM 4.**            **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

             TheCompany held a special meeting of stockholders on May 18, 2001 with respect tothe sale of its lottery assets.  Thefollowing matters were acted upon:

 
**Matter****Votes**  **For** **Votes**  **Against** **Abstain** Approval of the Asset  Purchase Agreement between the Company and Interlott and the transactions  contemplated by the Agreement2,586,981 10,852 13,599 Approval of the  Amendment to the Company’s articles of incorporation to change the name to  Global ePoint, Inc.2,602,293 8,866 6,940 
**ITEM 5.**            **OTHER INFORMATION**

             OnAugust 13, 2001, Michael Carlton resigned as a director of the Company due toconflicting business requirements.  TheBoard has chosen not to replace Mr. Carlton at this time.

**ITEM 6.**            **EXHIBITS AND REPORTS ON FORM 8-K**

*(a)*        *Exhibits*             N/A

*(b)*        *Reports on Form 8-K*             N/A

**SIGNATURES**

In accordance with the requirements ofthe exchange Act, the registrant caused this report to be signed on its behalfby the undersigned, thereto duly authorized.
 **Global  ePoint, Inc.**    Date:  August 14, 2001/s/  Charles R. Broz  As  Principal Financial Officer on behalf of  Registrant
 **