VelocityHSI Modifies Business Plan, Including StaffReductions; Company Will Focus On Service...

Business Editors

WALNUT CREEK, Calif.--(BUSINESS WIRE)--Dec. 15, 2000

VelocityHSI, Inc. (OTCBB:VHSI), a provider of high-speed Internet services to the apartment industry, announced today that it has modified its business plan in light of adverse changes in the capital markets

and the failure of an anticipated financing to fund. Under the revised plan, the company will continue to provide service to its current subscribers and continue its efforts to increase the number of subscribers at the multi-family apartment properties currently serviced by the company. Until the company obtains additional financing, it will defer efforts to expand service to other apartment properties.

To reduce operating expenses in accordance with the revised plan, the company has reduced its full-time workforce by approximately 50%. "These reductions are difficult for everyone," said Stephen Carlson, president and chief executive officer of the company. "It is imperative that we preserve our cash resources; however, it is equally important that we continue to provide the highest quality service to our subscribers while we explore alternative courses of action."

VelocityHSI provides service to properties that contain approximately 11,000 apartment units in properties owned or formerly owned by BRE Properties, Inc. The company currently serves over 2,000 subscribers of its broadband product.

Safe harbor statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements concerning the company's plans to control expenses, engage in efforts to increase subscribers and explore additional sources of financing. Actual events or results may differ materially as a result of the risks facing the company. Those risks include the risks that the company may be unable to continue to market it services effectively with a reduced workforce or secure necessary additional financing, as well as the risks set forth under "Risk Factors" and in other cautionary statements included in the company's filings with the Securities and Exchange Commission.