WALNUT CREEK, CA-Locally-based VelocityHSI, a provider of high-speed Internet services to the multifamily apartment industry, has revamped its business plan and slashed half its workforce. Saying it has modified its business plans because of adverse changes in the market for its product and its failure to secure an additional round of anticipated financing, the company says it will stop efforts to expand service to new apartment properties until it can secure more funding.

In the meantime, VelocityHSI, whose shares fell 72% to seven cents a share Friday, will continue to serve existing clients and continue to increase the number of subscribers at the apartment properties where they are currently available. “These reductions are difficult for everyone,” says Stephen Carlson, president and CEO 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, a spinoff from the apartment REIT BRE Properties Inc., originated as a suite of Internet services developed by BRE Properties for residents of its various apartment communities. To date, VelocityHSI has been installed in more than 35 apartment communities with 10,796 apartments, totaling 1,900 subscribers. Initially, the company was being funded by a $10 million credit commitment from BRE Properties, of which the company had spent approximately $1.6 million by the end of third quarter 2000.

Charles Winguard from VelocityHSI told GlobeSt.com last month that it would be some time before the company would prove to be profitable. “BRE’s commitment will serve as bridge financing until we secure other forms of capital, which we are pursuing. I don’t see VelocityHSI becoming a profitable venture in the near future. When we started, I knew it would take at least 18 months to break even.”

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