For the six-month period, revenues increased 131.4 percent to $10.4 million compared to $4.5 million from the first six months of 2003. This increase was the result of an increase in contract manufacturing revenue of $5.0 million and the revenue provided due to the acquisitions in April of Perpetual, $250,000, and AirWorks, $659,000, (the acquisitions) compared to the first six months of 2003.  The year over year increase in contract manufacturing revenue was primarily attributed to the increase in sales in the consumer PC market and sales of computer components.

Cost of sales was $8.4 million, a 166.8 percent increase from $3.1 million reported for the first six months of 2003.   The increase in the cost of sales was primarily due to the increase in contract manufacturing sales to the consumer PC market and sales of computers and electronic components.   The acquisitions increased cost of sales by $557,000 compared to the six months ended June 30, 2003.

Gross profit for the first half of 2004 was $2.0 million, or 19.6 percent of sales, compared to gross profit of $1.4 million, or 30 percent of sales, an increase of 50.0 percent.  The decrease in gross profit as a percent of sales was due to the increase in lower margin sales of consumer PC products and component parts offset by the increased gross margins provided by Perpetual (38.6 percent) and AirWorks (39 percent).

Selling and marketing expenses increased 10.2 percent to $1.1 million compared to $987,000 for the first six months of 2003.   A $241,000 year over year increase is due to the acquisitions offset by a decrease of $190,000 due to a reduction in non essential sales personnel within the digital technology division.

General and administrative expenses, increased 231.4 percent to $2.3 million, compared to $707,000 for the first six months of 2003.  Research and development resulted in a year over year increase of $144,000 to $506,000, compared to $362,000 for the first six months of 2003.  In addition, the Company incurred approximately $372,000 in professional fees and other expenses associated with being a public entity.  $404,000 was due to the acquisitions comprised of salaries and wages and other administrative expenses.  Additionally, expenses in the contract manufacturing division increased $515,000 year over year.  An additional $284,000 of personnel and other facility expansion expenses was required due to increase in sales and the anticipated increase in production to support expected ramp up of revenue resulting from the Perpetual acquisition.  $231,000 was due to additional salaries, selling, administrative costs, marketing and promotional costs associated with Vicious PC, our new consumer gaming product for which there were no comparable expenses in the six months ended June 30, 2003.

Net loss for the first six months of 2004 was $1.8 million, or $0.17 per basic and diluted share, compared to a net loss of $586,000, or $0.10 per basic and diluted share for the first six months of 2003. Weighted average shares outstanding for the quarter were 10.8 million compared to 5.9 million for the second quarter of 2003.

The Company’s net book value was $7 million and had $16.2 million of total assets as of June 30, 2004.

“In the past six months, our management team has acquired and integrated the key components necessary to create a dynamic, vertically integrated company,” commentedToresa Lou, Global ePoint’s chief executive officer. “We also assembled an experienced management team and expanded the breadth of our proprietary digital surveillance products to address the growing needs in a broad array of industries. In addition, we have laid the groundwork, through a considerable investment in our research and development budget, for our future growth as we look to maintain our technological advantages and develop tomorrow’s products. While we have made considerable progress integrating our operating divisions to create a unified and diversified Company, we still have considerable work to do in terms of exploiting the inherent synergies while continuing to reduce redundant operating expenses. Those goals are the immediate focus going forward and we feel that if our efforts are successful, we should start harvesting the substantial profit potential provided by the multi-billion dollar digital surveillance and security market.”

On August 5, 2004, Global ePoint completed the private placement sale of convertible preferred stock and common stock purchase warrants to three equity funds managed by Mercator Advisory Group, LLC, of Los Angeles, California. The gross proceeds to the Company were $5.5 million. The Company filed an 8-K listing the specific terms and will discuss this in more detail on its conference call.

“The confidence shown in our business plan by Mercator Advisory Group is encouraging, and we now have the necessary capital to completely integrate our recent acquisitions, continue prudent research and development efforts, accelerate our sales and marketing efforts, and execute our growth strategy,” commented John Pan, the Company’s chairman and chief financial officer.

Highlights of events during and subsequent to the quarter:

• On Aug. 17, Global ePoint announced the appointment of Joseph P. Cappelletti to Vice President of Sales and Marketing for the Company's Digital Division. Mr. Cappelletti was a founder and also previously served as President of Ademco Distribution, Inc. (ADI), a Melville, New York based division of Honeywell, Inc. During his 24 year career with the Ademco Group, he helped create one of North America's largest wholesale distributors of security and low voltage products with annual sales that exceeded more than $1 billion.

• On Aug. 2, Global ePoint announced its AirWorks division has received additional orders, including reorders and upgrades, worth $212,000, for the Company's Cockpit Door Surveillance Systems (CDSS). LTU, one of Germany's premier vacation and charter carriers, placed a reorder for additional CDSS systems and will upgrade the fleet which already has CDSS systems with the new AirWorks five-inch CDSS touch sensitive monitors.

• On July 27, Global ePoint announced its AirWorks division has received FAA and European JAA (Joint Aviation Authorities) certification for Fire Detection and Fire Suppression kits and will immediately begin delivering kits to Air One airlines of Italy. The initial $257,400 order was placed through Autronics and is for 19 aircraft to be followed with a reorder for six additional aircraft.
• During the quarter, Global ePoint announced its AirWorks division has entered into a purchase term agreement amendment with Lufthansa Technik AG, which will allow Lufthansa Technik to market and sell the AirWorks Cockpit Door Surveillance System (CDSS). Lufthansa Airlines was the original customer for the AirWorks CDSS, installing the system on their entire fleet of Narrow body and Wide Body Aircraft.
• In July Global ePoint’s AirWorks division received initial orders from American Airlines to install Laptop Computer Power systems in 103 additional MD-80 aircraft. The initial orders are for $361,000 with a follow-on orders anticipated.
• During the quarter, Global ePoint announced its Perpetual Digital division has completed initial delivery of Digital Video Recorder (DVR) Surveillance Systems with point-of-sale interface to Ace Hardware.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company's current expectations, estimates and projections, management's beliefs and numerous assumptions, al of which are subject to change. The forward-looking statements are not guarantees of future results and are subject to numerous risks and uncertainties. Actual results could differ materially and adversely from those expressed in any forward-looking statement. For example, there can be no assurance that our digital technology operations will achieve planned growth in the future. The order may be canceled, or problems with the system or installation may result in added costs or prevent revenue recognition. The forward-looking statements in this release speak only as of the date of this release. We undertake no obligation to revise or update publicly forward-looking statements for any reason. These and other risk factors are detailed in our periodic filings with the Securities and Exchange Commission.