Global ePoint Announces Second Quarter Results

Second Quarter Revenue Increases 13% Company Has Record Current Backlog of $18 Million

CITY OF INDUSTRY, Calif.--(BUSINESS WIRE)--Aug. 22, 2005--Global ePoint, Inc. (NASDAQ: GEPT - News), a developer of innovative security solutions for the aviation, homeland security and law enforcement markets, announced today second quarter results for the period ended June 30, 2005. The financial results include operations from the Company’s Digital Technology, Aviation and Contract Manufacturing operations.

The Company reported revenue of $5.2 million compared to the same period in 2004 when Global ePoint had revenue of $4.6 million. Higher sales of security products, as well as an increase in revenue from its contract manufacturing division, contributed to the increase in sales. The Company currently has a backlog of orders of $18 million, the highest in its history. Most of the backlog is expected to be realized as revenue during the second half of the year.

The Company’s continued investment in research and development and sales, marketing and infrastructure costs related to the recently launched Perpetual Digital product line and the Aviation division resulted in a net loss of $1.8 million in the second quarter of 2005, compared to a net loss of $1.5 million for the 2004 second quarter. Global ePoint had a net loss applicable to common stockholders of $(2.7) million or $(0.22) per share, compared to a net loss applicable to common stockholders of $(1.5) million or $(0.13) per share for the same period in 2004. The 2005 net loss applicable to common stockholders is inclusive of the net loss and a non-cash dividend on preferred stock of $880,000.

For the six months ended June 30, 2005, Global ePoint had revenue of $10.7 million, compared to $9.0 million in the first six months of fiscal 2004. The increase in revenue was due to higher revenue from the Company's Perpetual Digital and Aviation businesses, along with higher contract manufacturing revenue.

Increased costs for research and development and higher sales, marketing and infrastructure costs related to the Perpetual Digital product line and the Aviation division resulted in a net loss of $3.5 million for the first six months of fiscal 2005, compared to $1.8 million for the same period in fiscal 2004. The Company had a net loss applicable to common stockholders of $(4.9) million, or $(0.39) per share, compared to a net loss applicable to common stockholders of $(1.8) million, or ($0.17) per share for the six months ended June 30, 2004. The 2005 net loss applicable to common stockholders is inclusive of the net loss and a non-cash dividend on preferred stock of $1.4 million.

"During the second quarter, we continued to make the transition from lower margin contract manufacturing sales to higher margin state-of-the-art security products," said Toresa Lou, Global ePoint’s Chief Executive Officer. "Recently, this has begun to yield tangible results, as our AirWorks and Perpetual business units have received several significant new contracts, from which we will recognize significant revenue during the second half of the year. The recent bombings in London highlight the need for video as a key component in homeland security. We believe there exists numerous opportunities for growth in our video surveillance product lines, which have broad applicability across a range of industries including financial, law enforcement, hospitality and aviation. Finally, we continue to focus on completing the acquisition of Astrophysics and further expanding our portfolio of security-related products."

About Global ePoint’s Aviation Division                                                                     

The Company’s Aviation Division includes Global AirWorks, whose primary communications and security products include the Cockpit Door Surveillance System (CDSS), a digital electronic “flight bag” of all flight and on-board manuals and records for pilots and a Laptop Computer Power System for passengers and flight crews. AirWorks customers include airline major OEMs, such as AT&T; Aviation, BAE Systems, In-flight Phone, L3 Communications, and Rockwell Collins; all major U.S. airlines; and all major international carriers, including ATA, Air China, Bombardier, Finnair, Varig, KLM, Lufthansa, and Cathay Pacific. AirWorks holds more than 40 supplemental type certificates (STC) certifying AirWorks as a Federal Aviation Administration (FAA)-approved manufacturer and installer for a range of interior equipment and systems for a variety of commercial aircraft flying worldwide.

Some of the recent highlights include:

• New products. The Company introduced Mass Transportation System (MTS), a new digital video security solution targeting the Mass Transportation marketplace. The MTS is a modified version of its Aviation Division’s highly successful Cockpit Door Surveillance System (CDSS). The MTS is designed to monitor the activity of passengers aboard any form of mass transportation and to provide security personnel with live video and the ability to archive 720 hours of recorded data.

• Growing orders for AirWorks, the Company’s Aviation Division. AirWorks was awarded a $7.3 million contract by Avianca Airlines, a leading South American airline, to purchase a variety of aviation related equipment and services, including the CDSS, In Flight Entertainment systems, the Electronic Flight Bag/Class I, In-Seat Laptop Computer Power Systems and various cabin refurbishment for Avianca’s fleet of Boeing 767, 757 and MD-83 aircraft. The Airline has already placed the initial orders under the agreement. The suite of products and services are expected to enhance airline security and lower fuel consumption

• First sale of Perpetual Digital's video surveillance system to a law enforcement agency. A California Police Department placed the order for the Company’s Perpetual Digital division’s video surveillance systems. The Digital Video Recorder system includes indoor and outdoor surveillance cameras, and Perpetual Digital’s BridgeMax video archival system.

• First sale of Perpetual Digital’s video surveillance system to the hospitality industry. A leading fast-food restaurant chain, with over 100 locations, placed an order for Perpetual Digital's Embedded Digital Video Recorder systems and Surveillance Cameras.

• Growing sales of Perpetual Digital’s video surveillance system for the financial services industry. A major financial services institution placed a reorder for the Perpetual video surveillance system for its check processing centers, a highly sensitive area of operations for them. The Perpetual Digital systems had to meet stringent government and corporate security specifications before being approved for the surveillance project.

• New orders for video surveillance equipment. Thomas Cook Airlines UK, a worldwide charter vacation provider, placed an order to expand its current CDSS to include Digital Video Recording. Thomas Cook has been flying the AirWorks CDSS system since early 2003 on its fleet of seventeen 757’s, six A320’s and two A330’s. AirWorks has begun installation of the system on the Thomas Cook A330 fleet.

• Significant order for Company’s Contract Manufacturing Division. The Division recently received a $5 million personal computer subcontract order from Avatar Technologies for a major Mexican retailer.

"We believe these recent contract announcements demonstrate that our businesses have begun to gain momentum," added Ms. Lou. "We expect, as demand for our innovative security solutions increases, that we will generate strong revenue growth throughout the balance of the year."

About Global ePoint, Inc.                                                                     

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 http://www.globalepoint.com.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This release may contain forward-looking statements. 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-Q, 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.


Global ePoint, Inc.
John Price, 909-869-1688 Ext.307
[email protected]
CEOcast, Inc. for Global ePoint
Ed Lewis, 212-732-4300
[email protected]