Global ePoint Reports First Quarter Results

Sales Increase 33.6% as Revenue From Company's Global AirWorks Aviation Division Increases 285%

CITY OF INDUSTRY, Calif. — (BUSINESS WIRE) — May 17, 2006 — Global ePoint, Inc. (the "Company") (Nasdaq: GEPT - News), a leading manufacturer of security technologies for the aviation, law enforcement, commercial and industrial markets, announced today results for its first quarter ended March 31, 2006. The Company reported revenue of $7.3 million, compared to revenue of $5.5 million in the same period of fiscal 2005. The increased revenue was a result of higher sales in both the Company’s Aviation and Contract Manufacturing Divisions. Revenue from the Aviation Division, which is comprised of Global AirWorks, increased from $0.4 million in the first quarter of fiscal 2005 to $1.7 million in the first quarter of fiscal 2006, while the Contract Manufacturing Division saw revenues increase by $0.7 million from the first quarter 2005 to the first quarter 2006.

Global ePoint had a net loss of $(2.1) million for the first quarter ended March 31, 2006 compared to a net loss of $(1.7) million in the prior year period. The Company reported a net loss applicable to common stockholders of $(2.2) million, or $(0.14) per share, for the first quarter ended March 31, 2006 compared to a net loss applicable to common stockholders of $(2.2) million, or $(0.17) per share, in the first quarter ended March 31, 2005. The larger net loss was due to increased investments in the Company’s Digital Technology and Aviation Divisions, and higher costs associated with being a public company. The net loss applicable to common stockholders in each period includes a non-cash preferred dividend of $136,000 in the first quarter of fiscal 2006 and $492,000 in the first quarter of fiscal 2005.

Global ePoint reported working capital of $2.5 million as of March 31, 2006.

"Many of the exciting initiatives we began in 2005 are expected to result in strong revenue growth this year," said Toresa Lou, Global ePoint’s Chief Executive Officer. "The recently announced agreement to acquire Tops Digital Security, and new products and marketing initiatives are expected to drive growth in our Digital Technology Division. The opportunities in our Aviation Division remain substantial, as legislation from the Federal Aviation Administration (FAA) and similar regulatory agencies worldwide is expected to act as a catalyst for airlines to place orders for our Cockpit Door Surveillance Systems (CDSS). We believe 2006 will be a year characterized by strong growth and profitability by year end."

"We believe many of the initiatives we pursued in the first quarter will position the Company for strong growth throughout the balance of the year," according to Ms. Lou. "Revenue from Global AirWorks increased, driven by a significantly higher level of maintenance activities. However, we continue to invest in building the infrastructure necessary to support the sales we expect to realize when the FAA and the European aviation regulatory authorities mandate flight deck door surveillance systems, which are expected to significantly increase sales of our CDSS. In our Digital Technology Division, we recently announced an agreement to acquire the assets, including intellectual property and customer base, of Tops Digital Security. Tops is a privately held total solutions provider of large enterprise video surveillance systems that are designed primarily for high quality video capture and central monitoring security operations in the high-end commercial, industrial, and government electronic security markets. We believe that the combination of Tops' innovative surveillance products along with its expanded customer base will drive sales in our Digital Technology Division."

Business Outlook

The Company reiterated 2006 full-year revenue of $50-60 million. The key revenue will shift from traditional contract manufacturing to Digital Security and Aviation Divisions which have higher margins. With the intellectual property the Company has developed in the Digital Security Division in all the STC certifications it has in the Aviation Division, the Company believes it is ready to capitalize on the opportunities in the surveillance markets.

Global ePoint’s Aviation Division ended the first quarter of fiscal 2006 with a backlog of $9.6 million, compared to $10.7 million at the end of the fourth quarter of fiscal 2005.

Global ePoint designs, manufactures, sells and distributes digital video surveillance systems for the law enforcement, military, aviation and homeland security markets. On the cutting edge of digital technology, 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. 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

This news release contains forward–looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Company’s anticipated future revenues and profitability, statements about expected government regulatory actions, whether the Company gains traction in surveillance markets, whether its markets will become growth catalysts for Global ePoint and whether Tops achieves its target of generating $8 million in revenue over the next 12 months. 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, potential delays in the enactment of government regulations, such as FAA mandates concerning flight deck door surveillance systems, or changes in anticipated regulations, or financial distress in the airline industry, all of which could negatively impact the Company's sales to the airline industry, Global ePoint’s success in capturing market share in these markets. For a discussion of these and other factors that 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.

Global ePoint, Inc.
John Price
[email protected]

CEOcast, Inc. for Global ePoint
Ed Lewis