Boundless Corporation Reports Second Quarter 2000 Results; Revenue Increases by 40% Quarter-to-Quarter.

Business Editors/High-Tech Writers

HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Aug. 15, 2000

Boundless Corporation (AMEX: BND) today announced highlights and financial results for the second quarter ended June 30, 2000. The Company reported that revenues increased 16% for the second quarter ended June 30, 2000 to $ 23,408,000 compared with revenues of $ 20,230,000 for the second quarter ended June 30, 1999. Revenues increased 40% from a first quarter 2000 level of $16,735,000. The Company's continuing investments in its two recently-launched subsidiaries Merinta, an Internet appliance software and services company, and Boundless Manufacturing Services, an electronics manufacturer for technology companies, led to an anticipated net loss for the quarter.

During the second quarter, the company began to execute its overall strategic plan of leveraging its unique core competencies, developed over 30 years, to enter the burgeoning Internet appliance (IA) and electronic manufacturing services (EMS) marketplaces through its subsidiaries. As part of a market-seeding project during this period, Merinta completed a 10,000 unit deployment of its iBrow(TM) Internet device to Virgin Entertainment, via reseller IAN. The sale represents 25% of revenues generated in the quarter. At the same time, Boundless Manufacturing Services, having fully completed the integration of its newly acquired Florida manufacturing facility, which brings to the company surface mount technology (SMT) and Printed Circuit Board Assembly (PCBA) design and manufacturing capabilities, contributed $2,975,000 in quarterly sales and, perhaps even more importantly, added significant manufacturing competencies to its service offerings. Additionally, Boundless Technologies, Inc., the company's text and Windows(R)-based Terminal (WBT) subsidiary, began shipping to a new original equipment manufacturer (OEM) partner during this period. Sales from the subsidiary comprise 62% of the quarter's revenue.

"Our plans to align the company as three separate entities under the Boundless Corporation umbrella and our substantial investments will allow us to capitalize on both the IA marketplace, estimated by IDC to reach a value of $17.4 billion in just 3 years, as well as the EMS market which recorded revenues last year at over $90 billion and is projected to see double-digit growth over the next five years," said J. Gerald Combs, Chairman and Chief Executive Officer of Boundless Corporation. "We are already reaping the benefits of our new growth strategy, as evidenced by the increase in revenues, contracts and strategic relationships forged during this quarter, which should assure continued growth. The capital invested in Merinta and Boundless Manufacturing Services resulted in an increase in operating expenses that was fully expected. While Boundless would have shown a substantial profit had these investments not been made, we firmly believe that shareholder value going forward will be favorably impacted as we leverage our more than 30 years of experience in building and marketing desktop and network devices to expand into these growing markets."

Commenting on the company's expenditures for its IA subsidiary, Merinta president Jeffrey Moore said, "These expenditures have enabled us to develop our proprietary patent-pending software, create a corporate infrastructure, and expand our sales and marketing departments in just a few short months. Leveraging Boundless' long history of software development in small-footprint embedded systems and remote management software associated with the company's successful line of text and thin-client devices will enable us to achieve our goal of developing and marketing an end-to-end universal platform for connecting, managing and customizing media-rich Internet appliances. Merinta, the growth of the IA market, and the acceptance of its software and services by major OEMs are already well ahead of its internal projections. Since its inception in January of this year, Merinta has already established itself as a market leader in providing software and services for media-rich Internet devices and has secured strategic relationships with Acer America, Virgin Entertainment, Lycos, Inc. (NASDAQ NM: LCOS), and BRE Properties, Inc. (NYSE: BRE)."

Regarding Boundless Manufacturing Services' revenues, company president Joseph Joy said, "In a relatively short period of time, we've fully integrated the staff and operations of our new Florida facility, as well as delivered product to our OEM customers which resulted in a 13% contribution to the company's quarterly revenue. Most notably, we've added manufacturing capabilities that enhance our ability to provide a seamless end-to-end total Supply Chain Solution, including hardware and software design, new product introduction (NPI), board and systems level assembly and test, worldwide distribution, warranty and repair as well as product and program realization from concept through post-sale customer service. Our current and expanding capabilities and expertise, coupled with our experienced management team, make us confident that our strategic entry into the EMS market is well aligned with our core strengths developed over three decades and the needs of the market. We are positioned to be the product realization partner for today's virtual companies and aspire to become a top-tier EMS provider within five years."

Addressing contributions from the company's text terminal and thin-client business, Mike Oliva, managing director of Boundless Technologies, Inc. commented, "We are pleased with our continuing sales of text terminals and WBTs which equate this quarter to 48% and 14% of revenue, respectively. Despite an overall decline in the text terminal market, particularly in Europe where the Euro dollar and lingering Y2K problems have impacted server sales, Boundless Technologies continues to gain a firmer foothold in the market."

Independent reports revealed that the company was the only vendor to increase penetration of the market last year, having gained a 6 percent share increase worldwide.

Oliva continued, "We intend to continue to explore new avenues to sell our product. With regard to our line of WBTs, we are witnessing a growing validation of the thin-client computing model, as evidenced by the near triple digit growth of worldwide shipments throughout the industry. We are continuing to make the necessary investments and believe that our new Capio II WBT will benefit from the release of Microsoft(R) Windows 2000, which features embedded support for WBTs, further accelerating market acceptance of the thin-client concept."

Gerry Combs added, "Boundless will continue to make the investments to develop and acquire the competencies we believe complement our existing strengths. Boundless as a whole is addressing large, rapidly growing markets and has targeted top-tier OEMs and major telecommunication companies as potential customers. We expect to sign several software license and service agreements with major corporations shortly, as well as more technology alliances. Announcements regarding these new business opportunities will be made during the next quarter."

ABOUT BOUNDLESS

ABOUT BOUNDLESS CORP.

Boundless Corporation, composed of three subsidiaries, is a global technology company with over $80 million in annual revenue focused on developing, manufacturing and distributing hardware, software and services that make accessing information on the Internet and centralized servers easy, fast and cost-effective.

Merinta, Inc. (www.merinta.com), headquartered in Austin, Texas, is the industry standard for software that powers and manages Internet Devices. The iBrow(TM) Solution is an end-to-end software platform positioned to offer end-users an easy, enjoyable and visually rich Internet browsing experience while providing companies with a revolutionary way to market and grow online business. The iBrow(TM) Solution software is hardware- and O/S-independent and is the most flexible Internet Device platform on the market.

Boundless Technologies (www.boundless.com/bti) is the largest U.S. based manufacturer of Text, Window-based Terminal and Thin Client products. Boundless has helped revolutionize the computing industry by providing businesses worldwide a vast array of information access and display products, including the Capio, ADDS, VT and Dorio product lines. Boundless products offer appliance-like ease-of-use and access to Microsoft Windows NT applications as well as older "legacy" applications operating on mainframes, mid-range, and Unix systems. Key customers include Lucent Technologies, IBM, NCR, Compaq Computer and Hewlett-Packard, as well as extensive distribution and VAR partners. The company is based in Hauppauge, New York, with European offices in the Netherlands and sales, support and distribution centers throughout the world.

Boundless Manufacturing Services (www.boundless.com/manufacturing) is an emerging EMS company providing build-to-order (BTO) manufacturing as well as complete end-to-end solutions from design through product end-of-life to its customers. Headquartered in Hauppauge, New York Boundless offers in-house engineering expertise and an extensive design library to significantly decrease time-to-market for OEM customers. Core competencies include state-of-the-art ISO 9002 manufacturing facilities in New York and Florida, build-to-order, same day shipping and customer specific customizations.

For more information, visit the Boundless web site at http://www.boundless.com, or call 1/800-231-5445.

Editors: All company/product names and service marks may be trademarks or registered trademarks of their respective companies.

Except of the historical information herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based on a number of factors, including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product demand, the impact of competitive products and pricing, changing economic conditions and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.

                Boundless Corporation and Subsidiaries
                      Consolidated Balance Sheets
                            (In Thousands)

                                               June 30,  December 31,
                                                 2000      1999
                                               -------    --------
                                             (unaudited)
ASSETS

Current Assets

 Cash and cash equivalents                         651    $  1,285
 Trade accounts receivable, net                 14,129      12,378
 Income tax refund                                             833
 Inventories                                    11,750      13,751
 Deferred income taxes                           2,576       2,576
 Prepaid expenses and other current assets       2,301       1,039
                                               -------    --------
  Total current assets                          31,407      31,862

Property and equipment, net                     11,785      10,987
Goodwill, net                                    5,721       6,272
Other Assets                                     1,650       1,339
                                               -------    --------
  Total assets                                  50,563    $ 50,460
                                               =======    ========

LIABILITIES, REDEEMABLE STOCK AND
 SHAREHOLDERS EQUITY
Current Liabilities:
 Current portion of long-term debt               2,335       1,650
 Accounts payable                                6,781       6,148
 Accrued expenses                                5,739       5,565
 Deferred revenue                                  215         557
                                               -------    --------
  Total current liabilities                     15,070      13,920
                                               -------    --------

Long-Term Liabilities

 Long-term debt, less current maturities        18,079      14,206
 Deferred income taxes                             281         281
 Other                                             673         638
                                               -------    --------
  Total long-term liabilities                   19,033      15,125
                                               -------    --------
  Total liabilities                             34,103      29,045
                                               -------    --------
Shareholders' Equity

 Preferred Stock                                    --          --
 Common Stock                                       46          45
 Additional paid-in capital                     34,073      32,508
 Accumulated deficit                           (17,659)    (11,138)
                                               -------    --------
  Total shareholders' equity                    16,460      21,415
                                               -------    --------
  Total Liabilities and Shareholders' Equity    50,563      50,460
                                               =======    ========

                Boundless Corporation and Subsidiaries
                 Consolidated Statements of Operations
                            (In Thousands)

                                                Six Months Ended
                                                     June 30,
                                                 2000        1999
                                              (unaudited)
Revenue                                        $ 40,143    $ 41,286
Cost of revenue                                  33,417      29,599
                                                -------     -------

   Gross margin                                   6,726      11,687
                                                -------     -------
Operating expenses:
 Sales and marketing                              5,825       4,393
 General and administrative                       4,296       3,384
 Research and development                         2,875       2,395
 Other charges (credits)                            (11)       (550)
                                                -------     -------

  Total operating expenses                       12,985       9,622
                                                -------     -------

   Operating income                              (6,259)      2,065
 Interest expense, net                              518         751
                                                -------     -------

Income before income taxes                       (6,521)      1,213
Income tax expense (credit)                                     461
                                                -------     -------

Net income                                       (6,521)        752

Dividend on preferred stock of subsidiary            --          51

Earnings available for common stockholders       (6,521)        701

Weighted average common shares outstanding        4,524       4,430

Basic earnings per common share                   (1.44)       0.16

Weighted average dilutive shares outstanding      4,524       4,458

Diluted  earnings per common share                (1.44)       0.16