Contract Manufacturing Profits Continue, Digital Video Sales Growth Expected From Recent Acquisitions

City of Industry, Calif. — May 25, 2004 — Global ePoint, Inc. (Company) (Nasdaq: GEPT) reported financial results for first–quarter ended March 31, 2004.

Net sales for the quarter rose to $4.84 million, from $2.46 million in first–quarter 2003. Contract manufacturing sales rose to $4.8 million from $2.42 million due to higher sales of computers for the consumer and industrial markets. Digital technology sales were nominal and not significant in the quarters. Gross profit for the quarter was $1.1 million compared to $739,000 in first–quarter 2003.

Operating expenses were $1.6 million, compared to $812,000 in first–quarter 2003. Contract manufacturing expenses increased to $888,000 from $485,000 due to added production staffing and facility space and higher sales and marketing activity in preparation for expected growth. Digital technology expenses rose to $494,000 from $327,000 due to increased product development activity and the hiring of additional R&D personnel. Corporate expenses were $207,000 versus $0 as the result of expenses for accounting and legal fees and other expenses associated with being a public company.

First–quarter net loss was $362,000, or three cents per share, on 10,840,000 weighted average shares outstanding, compared to net loss of $73,000, or one cent per share, on 5,921,000 weighted average shares outstanding in first–quarter 2003. Due to the reverse merger in August 2003, financials for Global ePoint’s pre–merger operations are not included.

The increase in the number of shares outstanding is the result of Global’s acquisition in August 2003 of its contract manufacturing and digital technology divisions and the corresponding issuance of approximately 5,383,000 newly issued and outstanding shares as payment.

Toresa Lou, Global ePoint chief executive officer, commented: "Contract manufacturing continued to operate profitably, but $252,000 of product development costs on the digital technology side and corporate-level expenses of $198,000 related to being a public company contributed to the Company’s overall net loss for the quarter, compared to a year ago.

"However, we are making progress with our strategy to expand product and market opportunities and, therefore, grow sales, especially of digital video products and related systems," Lou added. "As the direct result of Global’s recent acquisitions, in the current second quarter Perpetual operations are already contributing incremental sales in the commercial and industrial markets for their digital video recorder (DVR) product line, and AirWorks cockpit door security systems and laptop power are also generating additional sales.

"To support overall growth objectives, we also plan to utilize contract manufacturing resources and sourcing and distribution channels to not only accommodate expected growth in digital video but also create cost efficiencies for improved margins, as well. Each digital technology division operation, from DVRs for commercial security to in–car police surveillance to in-cabin surveillance on aircraft, is expected to benefit from synergies inherent in Global’s integrated business structure."

Selected Operating Results
(Thousands of dollars, except per share amounts)
For the three months ended
March 31, 2004
Digital Technology
Contract Manufacturing
Net Sales $31 $4,809 $- $4,840
Cost of sales 26 3,739 - 3,765
Gross profit 5 1,070 - 1,075
Operating expenses 494 888 207 1,589
Income (loss) from operations (489) 182 (207) (514)
Other income (expense) (2) 47 107 152
Net income (loss) $(491) $229 $(100) $(362)
Per share on 10,848,000 shares . . . $ (0.03)

Global ePoint is a provider of computers, computing solutions and digital video, audio and data transmission and recording products. The Company’s primary operations are through two divisions: Digital Technology and Contract Manufacturing. The Digital Technology division designs and markets digital video surveillance systems for law enforcement, military and homeland security markets. The Contract Manufacturing division manufacturers customized computing systems for industrial, business and consumer markets and other specialized electronic products and systems. Global ePoint’s growth strategy includes developing new compression technologies and next-generation secure network digital video systems and servers for a wide range of new markets and applications. For more information go to

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward–looking statements are based on the company’s current expectations, estimates and projections, management’s beliefs and numerous assumptions, all of which are subject to change. These forward-looking statements are not guarantees of future results and are subject to numerous risks and uncertainties. Our actual results could differ materially and adversely from those expressed in any forward-looking statement. For example, deliveries may be delayed or installations canceled. Regulations may change and negatively affect demand for our products. There can be no assurance that the company’s AirWorks division will be able to achieve growth of sales or market share. 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 any forward–looking statement for any reason. These and other risk factors are detailed in our periodic filings with the Securities and Exchange Commission.

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